French and Dutch authorities raided Netflix’s offices in Paris and Amsterdam on Tuesday as part of a tax fraud investigation, according to a judicial source.
The raids, which involved specialist financial investigators, are linked to suspicions of “covering up serious tax fraud and off-the-books work” and are part of an investigation opened in November 2022.
The Amsterdam headquarters, which oversees Europe, the Middle East, and Africa, was also searched by a joint team of French and Dutch officials. The authorities have been cooperating on this criminal case for many months.
Netflix is under investigation in France for its tax filings for 2019, 2020, and 2021. The company did not immediately respond to AFP’s request for comment. Last year, Netflix stated it complies with tax laws in all operating countries, despite media reports about the investigations.
French outlet La Lettre A reported that until 2021, Netflix’s French operation was structured so all subscribers were registered through a Dutch subsidiary, allegedly minimizing its tax bill. Netflix paid less than one million euros in taxes to France in 2019 and 2020, despite having around seven million French subscribers. Authorities are now investigating if Netflix continued using illegal strategies to reduce reported profits and tax obligations.
In 2021 and 2022, the French subsidiary reported very low operating margins compared to its US parent company, paying just 6.5 million euros in taxes on its 2022 profits. Billing significant revenue to entities outside France is considered a legal tax optimization strategy under certain conditions.
Netflix earned over $9.8 billion in revenue worldwide from its 282 million subscribers in July-September this year, with a net profit of $2.4 billion.
Launched in France over 10 years ago, Netflix now has 10 million subscribed households.
The company adheres to local laws on commissioning French content, pays the full rate of VAT, and contributes to a film industry levy.
In 2023, Netflix invested 250 million euros in producing French content, including 50 million euros for feature films. Its popular French productions include the “Lupin” series starring Omar Sy, which broke into Netflix’s top 10 most-watched shows in 70 countries.
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