Update: Netflix has said it is cooperating with authorities in France following reports on Tuesday that its offices there and in the Netherlands had been raided as part of an investigation into alleged tax fraud and concealed employment.
“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,” a spokesperson for the streaming giant said in a statement in response to a query on the reports by Deadline.
According to earlier reports by weekly news magazine Marianne and daily newspaper Libération, the National Financial Prosecutor’s Office and the Central Office for the Fight against Corruption and Financial and Tax Offenses carried out searches in the streaming giant’s French HQ in the Paris’s 9th arrondissement on Tuesday.
Marianne, which broke the news, said the searches were part of a preliminary investigation opened in November 2022 for “laundering of aggravated tax fraud” and “concealed work in an organized gang”.
The magazine said the investigation has been sparked by a tax audit in 2022, in which Netflix’s declarations for France between 2019 and 2020 did not chime with the profits that would have been expected from its seven million subscribers at the time, suggesting it had operated tax optimization techniques.
According to Marianne, Netflix Services France paid $1.06M (€981,000) in taxes on profits for the 2019-20 fiscal year. The magazine added that Netflix’s French subsidiary appeared to have since abandoned tax optimization strategies, with its declared local turnover ratcheting up accordingly, from $51.3M (€47.1M) in 2020 to $1.3B (€1.2B) in 2022.
The aim of the investigation was to discover how the alleged tax fraud had been implemented internally. Liberation reported that a raid was also being conducted simultaneously in Netflix’s European HQ in the Netherlands, following months-long cooperation between French and Dutch investigators.
Netflix is not the first multinational to come under investigation in France for alleged tax optimization practices. In 2022, McDonald’s agreed to pay $1.36B (€1.25B) to the French authorities to avoid criminal prosecution for tax fraud between 2009 and 2020.