Apple is accused of hiding more than €1 billion ($1.34bn) from Italy's taxman, which may lead to civil or even criminal sanctions against the technology giant.
First reported by Italian media, and confirmed to Reuters citing a judicial source with knowledge of the situation, an investigation into the company's tax affairs is "under way."
No details were given by the source, however.
Italy's tax laws are known to be particularly aggressive, particularly in recent months and years, following a series of multinational corporations accused of avoiding or evading paying tax in the country. The corporate tax rate in Italy currently stands at 31 percent, much higher than the U.K.'s, which pegs in around 24 percent. Even then, many Silicon Valley giants in Britain have still been accused of funnelling profits into overseas banks in order to avoid paying the full near one-quarter of all profits in the country.
Meanwhile in the U.S., where Apple has also faced Congress over its tax setup, the country's main financial regulator recently cleared Apple's tax strategy. The U.S. Securities and Exchange Commission did not find anything nefarious about the company's structure, despite being accused by Congress of using a system dubbed the "Holy Grail of tax avoidance."
The last time Apple saw a major fine in Italy was in March 2012, after it was found to have broken Italian consumer laws. Apple was fined $1.2 million for "misleading" customers over its AppleCare extended warranty protection plan.
We reached out to Apple for comment but did not hear back at the time of writing. We will update the piece if we hear back.