(Bloomberg) — Netflix Inc. offices in Paris and Amsterdam were raided on Tuesday by investigators as part of a 2022 probe into alleged tax-related crimes and undeclared labor, according to a French justice ministry official.
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“We are co-operating 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,” the company said in a statement.
France and the Netherlands have been working together on the case since it was opened two years ago. The US-based streaming giant first came under scrutiny in France, one of the company’s biggest European markets, for tax filings from 2019, 2020 and 2021, according to a 2023 report in French newspaper La Lettre. Netflix’s French unit raised flags after it was discovered to be using a company in the Netherlands, where Netflix has its European headquarters, to reduce its tax obligation for revenue generated in France, according to the newspaper.
Netflix’s French operation was structured until 2021 so that subscribers signed up with a Dutch subsidiary, allowing the company to pay less than €1 million in taxes in France in 2019 and 2020, even as it had about 7 million French subscribers, according to the paper.
Once it ended that agreement, Netflix France started posting significantly higher revenue in France, when it began to count the subscribers in France, not the Netherlands, according to La Lettre. By 2022, Netflix was generating about $1.3 billion euros of revenue in France, more in line with its 10 million subscribers by June 2023, according to the newspaper.
A preliminary investigation doesn’t mean that criminal charges will be filed or that a trial will occur.
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