The US video streaming giant Netflix was raided by police in Paris and Amsterdam on Tuesday morning over alleged tax fraud and concealed employment, according to a judicial source confirmed by AFP.
The National Financial Prosecutor’s Office (PNF) launched a preliminary investigation in November 2022 into aggravated tax fraud and concealed employment involving Netflix France. This followed a tax audit for the years 2019, 2020, and 2021. Netflix’s headquarters for Europe, the Middle East, and Africa are located in Amsterdam, with both sites being subject to police raids.
"Raids are being conducted today at various locations, including the Netflix offices in France," said the judicial source. "These are carried out by investigators from the Central Office for the Fight against Corruption and Financial and Tax Crimes (OCLCIFF), with PNF members present."
Simultaneous raids are also taking place at Netflix’s offices in Amsterdam, carried out by Dutch magistrates and investigators, accompanied by their French counterparts.
This cross-border criminal cooperation between French and Dutch authorities has been ongoing for several months and coordinated by Eurojust.
A Netflix spokesperson had stated in the summer of 2023: "We comply with the tax rules of all countries where we operate."
Understated profits
Until 2021, the group, which entered France in 2014, minimised its tax liability by declaring its revenue generated in France. Customers contracted with a Dutch company, according to the media outlet, Lettre A, which first reported the tax audit.
From 2019 to 2020, Netflix Services France, which already claimed seven million subscribers in France, paid only €981,000 in corporate tax.
After abandoning this financial arrangement in 2021, Netflix’s reported revenue in France surged from €47.1 million in 2020 to €1.2 billion in 2021.
Tax officials are examining whether Netflix has continued to understate its profits in 2021, with Lettre A noting that the operational margin of the French subsidiary appeared very low compared to that of the US parent company.
With over 282 million subscribers worldwide by the end of September, Netflix recorded revenue of $9.82 billion in the third quarter of 2024, with a net profit of $2.4 billion.
