Netflix under Tax Fraud Investigation as Offices in France and Netherlands Raided

Reuters

12:30 JST, November 6, 2024

PARIS (Reuters) – Investigators searched the offices of U.S. streaming giant Netflix in France and the Netherlands on Tuesday as part of a preliminary investigation into tax fraud laundering, a French judicial source said.

The French investigation, carried out by the Parquet National Financier (PNF) – a special financial crime prosecution unit known for pursuing high-stakes white-collar probes that often involve large international companies – was opened in November 2022.

“We are cooperating with the authorities in France, where Netflix is a significant contributor to the local economy, and we comply with the tax laws and regulations in all the countries in which we operate,” a Netflix spokesperson told Reuters.

Investigators specializing in financial crime and corruption raided the company’s offices in central Paris on Tuesday morning.

Dutch authorities were simultaneously searching the company’s European headquarters in Amsterdam, the French judicial source said.

“Cooperation between the French and Dutch authorities has been under way for many months as part of these proceedings,” the French source said. The office of the Dutch prosecutor for financial crime declined to comment and referred questions to the PNF.

A preliminary investigation in France does not imply criminal charges and does not necessarily lead to a trial.

It was not immediately clear what prompted the investigation.

Large tech companies offering their online services and subscriptions across borders often run into difficulties with European tax authorities.

News website La Lettre reported last year that Netflix’s French subsidiary became the subject of scrutiny from tax authorities over its low reported turnover, which the outlet said was at odds with paying user numbers in the country.

Between 2019 and 2020, Netflix Services France paid less than €1.0 million ($1.09 million) in corporate taxes, by involving a separate unit registered in the Netherlands, La Lettre said, adding the company stopped the practice in 2021.

Corporate records reviewed by Reuters showed the revenue of Netflix’s French unit surged to around €1.2 billion in 2021, from 47 million the year before.

Netflix in France did not respond to a request for comment on the alleged reporting of revenues through Amsterdam rather than France in 2019 and 2020.

The PNF declined to give details on the scope of its investigation.

In 2022, Netflix agreed to settle a tax dispute with Italy by paying €55.8 million.

Netflix said on its website it opened its Paris office, located just around the corner from the Opera Garnier, in 2020 and employed around 40 staff.

The company produces most of its original films and series, including the global blockbuster Emily in Paris by working with third-party contractors. ($1 = €0.9149) (Additional reporting by Toby Sterling in Amsterdam and Mathieu Rosemain in Paris; Writing by Tassilo Hummel; Editing by Richard Lough, Ed Osmond and Sandra Maler)