Netflix under tax fraud investigation as offices in France and Netherlands raided

Authorities in France and the Netherlands have launched a preliminary investigation into potential tax fraud by Netflix, with searches conducted on Tuesday at the company’s Paris and Amsterdam offices. This high-profile probe, led by France’s financial crime prosecutor, the Parquet National Financier (PNF), has been underway since November 2022, following suspicions about the streaming giant’s tax practices across Europe.

In Paris, financial crime investigators raided Netflix’s central office, while Dutch officials simultaneously searched the company’s European headquarters in Amsterdam. This coordinated effort reflects extensive cooperation between French and Dutch authorities, according to a French judicial source.

A Netflix spokesperson told Reuters, “We are cooperating 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 investigation stems from reported discrepancies in Netflix’s revenue declarations. News outlet La Lettre reported last year that Netflix’s French unit showed unusually low turnover in France despite a robust paying user base, allegedly due to revenue being recorded through a separate Dutch subsidiary in 2019 and 2020. Netflix reportedly ceased this practice in 2021, after which its revenue in France surged from €47 million to €1.2 billion in 2021.

While the PNF’s investigation is preliminary and may not result in criminal charges, it highlights the scrutiny on large tech companies navigating complex tax rules in the European Union. The streaming giant’s French arm paid under €1 million in corporate taxes for two consecutive years, prompting questions from authorities. Netflix’s 2022 settlement with Italian tax authorities, where it agreed to pay €55.8 million over a similar tax dispute, further underscores the ongoing challenges tech firms face with European tax compliance.

Netflix launched its Paris office in 2020 and employs around 40 staff there, producing much of its original content such as Emily in Paris through partnerships with third-party contractors.