As reported by Deadline, French authorities conducted a raid on Netflix's offices in France on November 5th as part of a broader investigation into alleged tax fraud and concealed employment practices, as reported by local media.
According to the weekly news magazine Marianne and the daily newspaper Libération, the National Financial Prosecutor’s Office, along with the Central Office for the Fight against Corruption and Financial and Tax Offenses, executed searches at the streaming giant’s French headquarters located in the 9th subdivision of Paris.
Marianne, which was first to break the story, revealed that the searches were connected to an earlier investigation initiated in November 2022 regarding “laundering of aggravated tax fraud” and “concealed work in an organized gang.”
This investigative effort reportedly stemmed from a tax audit conducted in 2022, which found discrepancies in Netflix’s tax declarations for France from 2019 to 2020. The findings suggested that the financial declarations were inconsistent with the substantial profits one would expect from its seven million subscribers during that period, indicating that the company may have employed tax optimization strategies.
The report from Marianne indicated that Netflix Services France paid $1.06 million (€981,000) in taxes on profits for the fiscal year 2019-2020. Additionally, the magazine suggested that Netflix's French subsidiary has since moved away from prior tax optimization tactics, with its declared local revenue rising significantly—from $51.3 million (€47.1 million) in 2020 to $1.3 billion (€1.2 billion) in 2022.
The investigation aims to uncover the methods through which the alleged tax fraud was purportedly carried out internally.
In a related development, Libération reported that a simultaneous raid was taking place at Netflix’s European headquarters in the Netherlands, following months of collaboration between French and Dutch investigators.
Netflix joins a list of multinational corporations facing scrutiny in France over purported tax optimization practices. In a notable case from 2022, McDonald’s agreed to pay $1.36 billion (€1.25 billion) to French authorities to avert criminal prosecution for tax fraud that took place between 2009 and 2020.
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