Netflix, American video streaming giant, was the subject of searches in Paris and Amsterdam on Tuesday morning as part of an investigation into suspicions of tax fraud and hidden work, a judicial source told AFP, partially confirming information from Marianne. Netflix's headquarters for Europe, the Middle East and Africa is located in Amsterdam.
The National Financial Prosecutor's Office (PNF) opened a preliminary investigation in November 2022 for laundering of aggravated tax fraud and hidden work in an organized gang targeting Netflix France, already targeted by a tax audit covering the 2019, 2020 and 2021 financial years.
Joint searches
“Searchs are being carried out today in various places, notably at the headquarters of the Netflix companies in France” and “are carried out by investigators from the Central Office for the Fight against Corruption and Financial and Tax Offenses (OCLCIFF), in the presence of members of the PNF”, specified the judicial source. “Search operations are being carried out simultaneously at the headquarters of the Netflix companies in Amsterdam by Dutch magistrates and investigators, accompanied by French magistrates and investigators”announced this source.
“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”we again underlined. “We comply with the tax rules of all countries in which we operate around the world”a Netflix spokesperson indicated in the summer of 2023 when the information on the tax audit in France was revealed.
Minimized profits?
Until 2021, the group arrived in France in 2014 “minimized its taxation by declaring in the Netherlands its turnover generated in France”its clients contracting with a Dutch company, wrote Letter A, which revealed the information from the tax audit. “Between 2019 and 2020, Netflix Services France”which already claimed 7 million subscribers in France, thus paid “only 981,000 euros in tax on profits”.
After the abandonment of this financial arrangement in 2021, the turnover declared in France by Netflix jumped from 47.1 million euros in 2020 to 1.2 billion euros. Looking ahead to the 2021 financial year, “tax agents intend to verify whether (…) Netflix has not continued to improperly minimize its profits”explained Letter A, according to which the operating margin of the French subsidiary appeared very low compared to that of the American parent company.
With more than 282 million subscribers worldwide at the end of September, Netflix achieved $9.82 billion in revenue in the third quarter of 2024, for a net profit of $2.4 billion.
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