French and Dutch authorities have taken action against streaming giant Netflix, raiding the company’s offices in Paris and Amsterdam as part of an ongoing tax fraud probe.
French and Dutch authorities have been investigating Netflix over alleged tax fraud and off-the-books work, with searches conducted at various locations in France.
Netflix's Amsterdam headquarters for Europe, the Middle East and Africa was also targeted for a search by a team of officials from both France and the Netherlands.
"French and Dutch authorities have been cooperating on this criminal case for many months," a judicial source told AFP on Tuesday.
The investigation – which began in November 2022 – focuses on Netflix's tax filings for 2019 through to 2021.
Last year, Netflix insisted that it complies with tax law in all countries where it operates, after the probes were revealed in a media report.
French outlet La Lettre A had reported that Netflix's French operation was structured until 2021 so that all subscribers signed up with a Dutch subsidiary – thereby "minimising its tax bill".
In 2019 and 2020, this setup allowed Netflix to pay less than one million euros in taxes, despite having around seven million subscribers in France.
Investigators are looking into whether Netflix continued to use this strategy to minimise its reported profits and thereby its tax bill, La Lettre A added.
Tax optimisation
The French subsidiary reported very low operating margins compared to the US mothership in 2021 and 2022, the outlet said, paying just €6.5 million in tax on its profits in 2022.
But its practice of billing a large share of revenue to entities outside France represented a "tax optimisation strategy that is legal" under certain conditions, La Lettre A added.
Despite the investigation, Netflix remains a dominant player in the French market, with 10 million subscribers.
The company says it confirms with local laws on commissioning French content, paying the full rate of VAT and contributing to a film industry levy.
In 2023, it invested 250 million euros into French productions, including the popular series "Lupin", which became a global hit.
Netflix earned over almost €9 billion in revenue worldwide from its 282 million subscribers from July to September this year, with net profit reaching just over €2 billion.
(with AFP)
