Netflix Offices Raided in Tax Fraud Investigation
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French and Dutch authorities raided the offices of streaming giant Netflix in both countries on Tuesday, as part of a preliminary investigation into tax fraud and money laundering, reports Reuters.
The investigation, opened by France’s Parquet National Financier (PNF) in November 2022, focuses on potential tax irregularities within the company's operations.
“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.
French investigators specializing in financial crime and corruption searched the company's offices in central Paris on Tuesday morning, while Dutch authorities simultaneously conducted searches at Netflix's European headquarters in Amsterdam.
“Cooperation between the French and Dutch authorities has been under way for many months as part of these proceedings,” a French judicial source said.
It remains unclear what prompted the investigation, but news website La Lettre reported last year that French tax authorities were scrutinizing Netflix's French subsidiary for its low reported turnover, which appeared inconsistent with the number of paying users in the country.
The publication alleged that between 2019 and 2020, Netflix Services France paid less than €1 million in corporate taxes by routing revenue through a separate unit registered in the Netherlands. La Lettre added that the company stopped this practice in 2021.
According to corporate records reviewed by Reuters, Netflix's French unit revenue surged to around €1.2 billion in 2021, a significant increase from €47 million the year before.
Netflix in France did not respond to a request for comment on the alleged revenue reporting through Amsterdam rather than France in 2019 and 2020.
The PNF declined to provide further details on the scope of its investigation.
This investigation follows a similar tax dispute Netflix settled in Italy in 2022, paying €55.8 million to resolve the issue.
Large tech companies operating across borders often face challenges with European tax authorities due to the complexities of online services and subscriptions.
Netflix, which opened its Paris office in 2020, employs around 40 staff and produces most of its original films and series, including the popular “Emily in Paris,” through third-party contractors.