Authorities from the Netherlands and France conducted raids on Netflix’s offices in Paris and Amsterdam on Tuesday as part of a tax fraud investigation, according to a judicial source cited by AFP.
Netflix’s European, Middle Eastern, and African headquarters is based in Amsterdam.
The raids by specialized financial investigators are linked to suspicions of serious tax fraud and undisclosed financial activities, stemming from an investigation that began in November 2022. The French and Dutch authorities have been collaborating on this case for several months.
In addition to the ongoing investigation, Netflix is also being examined in France for its tax filings for the years 2019, 2020, and 2021. The company has previously stated that it complies with tax laws in all countries where it operates.
Reports from French media outlet La Lettre A indicated that until 2021, Netflix structured its French operations so that all subscribers registered through a Dutch subsidiary, resulting in tax payments of less than one million euros (approximately $1.1 million) to Paris for the years 2019 and 2020.
Authorities are now looking into whether Netflix engaged in illegal practices to reduce its reported profits and, consequently, its tax obligations, as the French subsidiary has shown significantly lower operating margins compared to its US counterpart.
For the July-September quarter of this year, Netflix reported over $9.8 billion in global revenue from its 282 million subscribers, with a net profit of $2.4 billion.
