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Netflix is being investigated for tax evasion in Italy

Italian magistrates are investigating Netflix for tax evasion, arguing that it is using the country’s internet cables to reach homes.

Bloomberg reports that the streaming giant is being probed by the Milan tribunal after it failed to file a tax return, according to people familiar with the matter and reports in Italian daily Corriere della Sera.

As noted by bizjournals, the streaming giant’s headquarters are in Los Gatos, California, while its European HQ is in Amsterdam. There are other European offices in Berlin, London, Madrid, and Paris, but none in Italy.

Italian prosecutors argue, however, that fiber optic cables and servers used by Netflix amount to the company having a physical presence in the country. Sources added that no company executive is under investigation because the probe is still at a preliminary stage.

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

Netflix isn’t the only US company to face a tax investigation in Italy. Apple, Amazon, and Facebook have all had to hand over money totaling billions of euros over the years in fines and back payments. But those companies do have offices in the country, so the Netflix investigation could set a new precedent.

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