Netflix’s offices in Paris and Amsterdam were raided by French and Dutch authorities on Tuesday as part of a tax fraud investigation.
Specialist financial investigators searched “various locations” in France in connection with allegations of “covering up serious tax fraud and off-the-books work” as part of a probe that has been running since 2022, a judicial source told news agency AFP.
The US streaming giant’s Amsterdam headquarters for Europe, the Middle East and Africa was also searched by a team of officials from both France and the Netherlands.
“French and Dutch authorities have been co-operating on this criminal case for many months,” the source added.
It comes after reports emerged last year that Netflix was under investigation in France for its tax filings for 2019, 2020 and 2021. In response, the firm insisted that it complied with tax law in all countries where it operates.
La Lettre, a French media outlet, reported that Netflix’s French operation was structured so that all subscribers were signed up with a Dutch subsidiary – thereby “minimising its tax bill” – until 2021.
It paid less than €1 million (£840,000) in taxes in Paris across 2019 and 2020, when it had around seven million French subscribers.
Authorities are now trying to determine whether Netflix made illegal attempts to minimise its reported profits and thereby its tax bill, La Lettre added.
The French subsidiary reported very low operating margins compared to Netflix’s US operation in 2021 and 2022, the outlet said, paying just €6.5 million (£5.5 million) in tax on its profits in 2022.
However, its practice of billing a large share of revenue to entities outside France represented a “tax optimisation strategy that is legal” under certain conditions, La Lettre added.