Dutch, French authorities raid Netflix offices in tax probe

PARIS (AFP) — French and Dutch authorities raided streaming giant Netflix’s offices in Paris and Amsterdam Tuesday as part of a tax fraud probe, a judicial source told AFP.

The search of “various locations” in France by specialist financial investigators relates to suspicions of “covering up serious tax fraud and off-the-books work” and is part of a probe opened in November 2022, the source said.

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,” the source said.

Dutch prosecutors confirmed the searches “in the context of a French legal assistance request,” while the European Union agency for Criminal Justice Cooperation (Eurojust) said it was “supporting the investigations” including Tuesday’s searches.

Netflix is under investigation in France for its tax filings for 2019, 2020 and 2021.

The company did not immediately respond Tuesday to AFP’s request for comment.

Netflix insisted last year 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 “minimizing its tax bill.”

That left it paying less than 1 million euros ($1.1 million at today’s rates) in taxes to Paris across 2019 and 2020, when it had around 7 million French subscribers.

Authorities are now trying to determine whether Netflix kept up illegal attempts to minimize its reported profits and thereby its tax bill, La Lettre A added.

The French subsidiary reported very low operating margins compared to the U.S. mothership in 2021 and 2022, the outlet said, paying just 6.5 million euros in tax on its profits in 2022.

But its practice of billing a large share of revenue to entities outside France represents a “tax optimization strategy that is legal” under certain conditions, La Lettre A added.

Streaming success

Netflix earned over $9.8 billion in revenue worldwide from its 282 million subscribers in July-September this year, with net profit reaching $2.4 billion.

The group arrived in France just over 10 years ago and now boasts 10 million households subscribed.

Netflix says it conforms with local laws on commissioning French content, paying the full rate of VAT and contributing to a film industry levy.

In 2023, the company said it pumped 250 million euros into producing French content, of which 50 million went to feature films.

Its top French-made output includes the “Lupin” series starring Omar Sy.

The show is a modern reimagining of the classic early-1900s tales of “gentleman thief” Arsene Lupin by writer Maurice Leblanc — France’s answer to British detective Sherlock Holmes.

The Netflix version broke into the top 10 most watched shows in 70 different countries, the platform boasts.

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By Agence France-Presse