Netflix pays 56 million unpaid taxes. “First case in the world of an occult society without personnel”

Netflix makes peace with the Italian tax authorities. The Californian giant of paid streaming movies and TV series closed the dispute with the Revenue Agency paying approximately 55 million and 850 thousand euros in a single tranche. This is how the tax front of the investigation by the Milan Public Prosecutor’s Office and the Economic and Financial Police Unit of the Gdf is defined for omitted tax return, i.e. for taxes not paid in Italy. When the investigation started in Italy there was not a single worker or a company that belonged to the American parent company: Netflix grossed millions of euros by selling movies and TV series without paying a euro in taxes. In the meantime, the group has opened its own operational headquarters since January 1, 2022.

The investigation and prosecutor Viola

The “multinational group”, reads a note signed by the Milan prosecutor Marcello Viola, “at the end of the tax assessment phase” made the total payment and in a single solution “of € 55.850.513 by way of taxes, penalties and interest to define each pending with the Italian tax authorities for the period from October 2015 to 2019 ». In the investigation, coordinated by the prosecutor Enrico Pavone (who inherited the file from his colleague Gaetano Ruta, who spent a year at the European Public Prosecutor’s Office), unlike the previous Milanese tax investigations that involved Apple, Google or Facebook (which had some structure organization in Italy), is contesting the US group led by Red Hastings – «the first case in the world – a stable «hidden organization of a foreign company operating in the digital economy completely devoid of personnel and characterized exclusively by an advanced technological structure “. Structure that “would have been subjected exclusively to the performance of key corporate functions for the conduct of its business in the State”.

Servers and streaming

The «Content Delivery Network of the» Netflix «Group was made up of over 350 serverswhich would have been used exclusively and permanently installed throughout the national territory at data centers and the main telephony operators “. That is, the group had technological infrastructures in Italy and here it “produced income” with subscriptions (that’s why the tax dispute). “This complex and evolved technological infrastructure would have formed the basis – writes the Prosecutor led by Viola – on which the Guardia di Finanza first and the Revenue Agency later identified the technical-legal prerequisites, required by international and national standards, for the configuration of a “material” permanent establishment », ie with technological infrastructures,« of a foreign company, deemed suitable for producing business income in Italian territory ».

The turning point from 1 January 2022

Since last January 1st Netflix has set up a company “under Italian law which has begun to stipulate contracts and invoice the fees deriving from subscriptions signed with national users. This will determine the taxation in Italy of the income produced by the sale of subscriptions to users residing in the national territory “.

Netflix comment: “We are satisfied”

A spokesperson for Netflix comments: «We are pleased to have put an end to this affair, which involved the 2015-2019 fiscal years. We have maintained constant dialogue and collaboration with the Italian authorities and we continue to believe that we have acted in full compliance with the Italian and international regulations applicable to the case in question “.

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