Italy prosecutors open Netflix tax evasion investigation: source

FILE PHOTO: The Netflix logo is seen on their office in Hollywood, Los Angeles, California, U.S. July 16, 2018. REUTERS/Lucy Nicholson/File Photo

MILAN (Reuters) - Italian prosecutors have opened an investigation into alleged tax evasion targeting U.S. streaming service Netflix, a source with direct knowledge of the matter said on Thursday.

Prosecutors in Milan say Netflix should pay taxes in Italy despite the fact that is has no physical presence locally because of the digital infrastructure it uses to stream content to 1.4 million users in the country, the source said.

The source confirmed a report in Italian daily Corriere della Sera.

Prosecutors argue that cables and computer servers used by Netflix amount to a physical presence in Italy.

The source said the probe had been triggered by checks conducted by Italy’s tax police. Given the size of the alleged tax evasion prosecutors were obligated to open an investigation, the source said.

No Netflix executive is under investigation because the probe is still at a preliminary stage, the source said.

Milan prosecutors in the past have probed other U.S. tech giants such as Apple, Amazon and Facebook for dodging taxes, allowing Italy to net several billion euros in fines and tax payments.

It was not immediately possible to obtain a comment from Netflix.

Reporting by Emilio Parodi, writing by Valentina Za; editing by Jason Neely