Italian Government Reportedly Investigating Netflix For Tax Evasion

Netflix’s operations in Italy are coming under scrutiny, as government officials there have reportedly launched an investigation into the streaming service for failing to file a tax return.

The Milan tribunal opened the probe because it believes Netflix has a substantial enough presence in Italy — including its physical infrastructure of cables and computers servers — to qualify as a local business, Bloomberg reports, and thus pay its share of taxes. News of the investigation first broke in a local outlet, Corriere della Sera.

Italy has reportedly been cracking down on other international businesses that boast local operations, Bloomberg reports, including Gucci (whose owner paid a reported $1.37 billion in May to settle an ongoing investigation spanning from 2011 to 217) and Mastercard (which said yesterday that it was complying with a mandatory audit after a raid by the Italian police). Furthermore, Amazon and Google have coughed up hundreds of millions of dollars in recent years to settle similar disputes.

“Netflix is closely working with Italian tax authorities. We pay all the taxes due in Italy and other countries,” the company told Bloomberg in a statement. “Netflix invests millions of euros in Italian production, thus contributing to creating jobs and sustaining the local creative community.”

To this end, just today — as news of the investigation broke — reports also surfaced that Netflix has inked a multi-year agreement to co-finance seven films with Mediaset, a broadcaster owned by Italian media tycoon and politician Silvio Berlusconi. Netflix will contribute most of the funding for the films, Bloomberg reports, and CEO Reed Hastings is expected to fly to Rome next week to publicly announce the partnership.