Netflix Raided in Paris and Amsterdam Over Tax Fraud Suspicions!

On Tuesday, both the French subsidiary in Paris and the European headquarters of Netflix in Amsterdam were the subjects of raids in an investigation initiated in late 2022 on allegations of tax fraud and concealed employment.

Raids were conducted today at several locations, including the Netflix offices in France,” and “were carried out by investigators from the Central Office for Combating Corruption and Financial and Tax Offenses (OCLCIFF), in the presence of members of the PNF,” a judicial source told AFP, confirming a report by Marianne.

“We are cooperating with the authorities in France, where Netflix significantly contributes to the local economy, and we adhere to tax laws and regulations in every country we operate”, a spokesperson for Netflix France stated when asked by AFP.

The National Financial Prosecutor’s Office (PNF) launched a preliminary investigation in November 2022, focusing on suspicions of aggravated tax fraud laundering and organized concealed employment.

The Netflix headquarters for Europe, the Middle East, and Africa, located in Amsterdam, was also raided “simultaneously by Dutch magistrates and investigators, accompanied by French magistrates and investigators,” the judicial source further detailed.

“A criminal cooperation action between the French and Dutch authorities has been conducted for many months in this case and has been coordinated by Eurojust,” it was additionally emphasized.

Eurojust confirmed its support for the investigation by “organizing the judicial cooperation” between France and the Netherlands, including a meeting in The Hague, where Eurojust is based.

“We confirm that operations were conducted as part of a French request for legal assistance,” Dutch prosecutors told AFP.

In the summer of 2023, La Lettre A disclosed that the streaming giant was under tax examination in France, covering the fiscal years 2019, 2020, and 2021.

According to this media outlet, up until 2021, the group “minimized its tax obligations by reporting its revenue in France to the Netherlands”, where its customers were contracting with a Dutch company.

“Between 2019 and 2020, Netflix Services France”, which already boasted seven million subscribers in the country, paid “only 981,000 euros in corporate taxes”.

After discontinuing this financial arrangement in 2021, the revenue declared in France by Netflix jumped from 47.1 million euros in 2020 to 1.2 billion euros.”

– Abuse? –

Examining the 2021 fiscal year, “tax officials intend to verify whether (…) Netflix has not continued to unduly minimize its profits”, La Lettre A reported.

It particularly noted the disparity between the “microscopic operating margin”, less than 2%, generated in France by the platform in 2021 and that of its American parent company, which stood at 20%, asserting that “this gap persisted in 2022”, a fiscal year in which the company “paid only 6.5 million euros on profits”.

“By reallocating a large portion of its revenue to other Netflix entities abroad”, the company engages in “a practice of legal tax optimization” under certain conditions, the media explained.

With over 282 million subscribers worldwide at the end of September, Netflix recorded $9.82 billion in revenue for the third quarter of 2024, resulting in a net profit of $2.4 billion.

In France, the company recently celebrated ten years since its entry, boasts over 10 million subscribing households, and ensures compliance with French regulations by meeting investment obligations in creation, paying full VAT and contributing 5.15% of its revenue to the CNC.

Netflix has reported investing “250 million euros” in 2023 in French production, including “50 million in cinema”.

Among its major hits in France, “Lupin”, launched with Omar Sy in 2021, reached “the top 10 most-watched series in 70 countries”, the platform boasts.

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