Telecom Italia May Have to Pay $546 Million in Tax Probe Involving Sparkle

Telecom Italia SpA, Italy’s biggest phone company, may be required to pay an additional 429 million euros ($546 million) in relation to a tax probe involving its Sparkle unit, according to its half-year report.

The payment of the sum, plus interest and penalties, is “possible but unlikely,” Milan-based Telecom Italia said on its website. Sparkle is a wholesale voice-services provider and the owner of Telecom Italia’s long-distance network.

Tax authorities have not yet requested the payment, Telecom Italia said. Because the company deems it improbable that it will have to pay out for the claim, related to so-called IRES and IRAP taxes, it has “not set aside any provision to cover this risk.”

Telecom Italia said last month that it paid 418 million euros to the tax agency on July 19 as it decided to proceed with payment of “reduced penalties and the full amount of VAT allegedly unrecoverable plus interest” in the Sparkle case. That sum had already been covered by a provision to help the company pay fines and taxes linked to an investigation into alleged fraud and money laundering at Sparkle.

To contact the reporters on this story: Chiara Remondini in Milan at cremondini@bloomberg.net

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