Paris and Amsterdam – November 5, 2024 — Offices of U.S. streaming giant Netflix were searched on Tuesday in France and the Netherlands as part of a tax fraud laundering investigation, a French judicial source revealed.
The probe, initiated by France’s Parquet National Financier (PNF), targets potential irregularities in Netflix’s tax practices, dating back to November 2022.
French financial crime investigators and their Dutch counterparts conducted coordinated searches in the company’s central Paris office and its European headquarters in Amsterdam.
“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. The spokesperson did not elaborate on the scope of the investigation or respond to specific allegations.
According to La Lettre, a French news outlet, Netflix’s French subsidiary faced scrutiny over reported turnover figures, which authorities considered disproportionately low in light of the company’s substantial user base in France.
The publication previously reported that Netflix Services France paid under €1 million in corporate taxes between 2019 and 2020 by attributing significant revenues to a separate Dutch unit, a practice the company reportedly ceased in 2021.
In 2021, records show Netflix’s French revenue surged from €47 million to €1.2 billion, reflecting what the company stated was a transition to reporting more of its earnings locally.
While the exact impetus for the investigation remains undisclosed, Netflix is one of several major tech companies navigating European tax regulations.
The PNF, known for high-profile investigations into multinational corporations, has collaborated with Dutch authorities in recent months on the case. Officials at the Dutch prosecutor’s office declined to comment, deferring inquiries to the PNF.
The Netflix investigation echoes a pattern of scrutiny faced by large digital companies that operate across borders, often centralizing their European operations in countries with favorable tax structures.
This allows companies to legally reduce tax burdens while operating extensively in other countries. Despite this standard practice, European regulators have steadily increased efforts to enforce stricter tax reporting standards for digital giants to ensure a fair tax contribution across nations.
Tuesday’s raid adds to the list of European tax disputes for Netflix, which resolved a similar issue in Italy by agreeing to a €55.8 million settlement in 2022.
The streaming service, headquartered in California, began expanding its physical presence in Europe in 2020 with the opening of its Paris office, which is located near the iconic Opera Garnier.
Today, Netflix’s French office employs around 40 staff members, focusing primarily on original content, including the globally popular series Emily in Paris.
Netflix produces most of its content by working with third-party contractors, which may add complexity to its tax filings.
Under French law, a preliminary investigation does not imply criminal charges and may not necessarily result in a trial. However, the PNF’s involvement indicates that the investigation could have significant legal implications for the company’s European operations.
The outcome of the probe remains uncertain as Netflix continues to cooperate with French and Dutch authorities.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members
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