The premises of the French subsidiary of the streaming giant are being searched this Tuesday, November 5, as part of an investigation for “laundering of aggravated tax fraud” and “concealed work in an organized gang”.
Like other multinationals before it, Netflix France is in the sights of the National Financial Prosecutor's Office and the Central Office for the Fight against Corruption and Financial and Tax Offenses. These two institutions are carrying out searches this Tuesday, November 5, in the premises of the French subsidiary of the American streaming giant, in the 9th arrondissement of Paris, according to information from the weekly Marianne and confirmed by Liberation. These investigations take place as part of a preliminary investigation opened in November 2022 to “aggravated tax fraud laundering” et “concealed work in an organized gang”. Access to the premises is still filtered by the police.
Tax optimization
The starting point of the investigation is a banal tax audit, two years ago, traces Marianne. As first revealed by the online media The Letter in 2023, French taxes took issue with the weak declarations of the French subsidiary of the platform. Before 2019, the margin rate of the French subsidiary was 2% when that of the parent company was 20% in the United States. According to The LetterNetflix would have set up a “legal tax optimization practice” in “reinvoicing a large part of its turnover to other Netflix entities abroad”notably via the subsidiary based in the Netherlands where the tax system is more lenient.
In fact, Netflix Services France claimed seven million subscribers “between 2019 and 2020” and would have paid “only 981,000 euros in tax on profits”. However, after abandoning this tax optimization technique, its declared turnover in France exploded, going from 47.1 million euros in 2020 to 1.2 billion euros, then to “1.3 billion euros in 2022”explains again Marianne. The aim of the current searches is to discover how this operation of “aggravated tax fraud laundering”.
Search operations “are taken simultaneously to the headquarters of the Netflix companies in Amsterdam by Dutch magistrates and investigators, accompanied by French magistrates and investigators”details a judicial source at Liberation. “A criminal cooperation action between the French and Dutch authorities has been carried out for many months as part of this procedure and has been coordinated by Eurojust”the European Union Agency for Judicial Cooperation in Criminal Matters.
The National Financial Prosecutor's Office has already singled out several American giants, such as McDonald's, for tax optimization practices. “fraudulent”. An investigation is also still underway regarding the consulting firm McKinsey. Each time, the system “optimization” of these multinationals are similar: “the French subsidiary pays imaginary or overcharged services to other foreign subsidiaries with the aim of reducing its profit in France and paying less taxes there…”observe Marianne.
France
