French and Dutch authorities raided the offices of streaming giant Netflix in Paris and Amsterdam on Tuesday as part of an ongoing tax fraud investigation. A judicial source confirmed the raids to AFP, revealing that the searches are connected to suspicions of “covering up serious tax fraud and off-the-books work.”
Netflix’s European headquarters, which oversees operations in the Middle East, Africa, and Europe, is based in Amsterdam. The investigation, which began in November 2022, has seen French and Dutch authorities working together for several months.
In addition to the raids, Netflix is facing scrutiny over its tax filings in France for the years 2019, 2020, and 2021. The company had previously stated that it adheres to tax laws in all the countries where it operates, but reports from French outlet La Lettre A suggest that Netflix may have taken steps to reduce its tax liabilities. Until 2021, Netflix’s French operations were structured in a way that funneled all subscriptions through a Dutch subsidiary, resulting in the company paying less than one million euros in taxes to France for 2019 and 2020.
The French authorities are now investigating whether Netflix continued efforts to underreport profits and lower its tax bill. La Lettre A also noted that Netflix’s French subsidiary reported significantly lower operating margins compared to its US parent company.
Despite these allegations, Netflix has continued to thrive globally. In the third quarter of this year, the company reported over $9.8 billion in revenue, with net profits reaching $2.4 billion from its 282 million subscribers worldwide.
The investigation into Netflix’s tax practices is ongoing, with authorities working to determine if the company unlawfully minimized its tax contributions.
