Netflix offices raided in Paris and Amsterdam over tax probe

The Paris offices of Netflix were searched as part of a preliminary investigation into potential "aggravated tax fraud laundering and infractions of labour law". Photo / 123RF

French and Dutch financial authorities have raided the offices of Netflix as part of a long-running investigation into potential tax fraud and breaches of labour law.

The US streaming giant’s offices in Paris and Amsterdam were searched on Tuesday morning by investigators, including those from France’s central office against corruption and financial and tax crimes (OCLCIFF).

They were accompanied by members of the National Financial Prosecutor’s Office (PNF), according to two people familiar with the situation.

The searches were part of a preliminary investigation opened in November 2022 that was looking at potential “aggravated tax fraud laundering and infractions of labour law”, according to one of the people.

No charges have yet been brought, and preliminary investigations in France do not necessarily mean there will be a trial.

A Netflix spokesman said: “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 financial prosecutor’s office declined to comment.

A criminal co-operation effort between French and Dutch authorities has been under way as part of this investigation, co-ordinated by Eurojust, the European Union agency for criminal justice co-operation, the person added.

The other person said the raids appeared to relate in part to Netflix’s use of the Netherlands to book subscription revenues from France between 2019 to 2021, via its main European subsidiary in Amsterdam.

The probe is also expected to include its arrangements since 2021, when Netflix’s French subsidiary started to receive local subscriber revenues but then paid a fee for the right to provide streaming services to France to its headquarters in the Netherlands.

France conducted a tax audit of the company two years ago related to these arrangements.

French media outlet La Lettre first reported the tax audit last year, saying Netflix’s annual declared turnover in France jumped from €47.1 million ($85.8m) in 2020 to €1.2 billion ($2.18b) in 2021 after it stopped booking revenues in the Netherlands.

People close to Netflix said the company had been co-operating fully with the audit, and the group has said in the past that it complies with tax law in all countries where it operates.

France is one of Netflix’s largest European markets, with more than 10 million subscribers reported in the country two years ago, and home to a host of popular programmes, including the hit series Lupin.

French financial prosecutors have taken aim at other big multinationals operating in France for alleged fiscal optimisation practices.

American fast food giant McDonald’s paid a €1.25b fine in 2022 to avoid criminal prosecution for tax fraud as part of a deal with French justice.

Probes into practices at consultancy McKinsey are also ongoing.

Written by: Daniel Thomas in London and Adrienne Klasa in Paris.

© Financial Times