French and Dutch authorities launch coordinated probe

French and Dutch authorities have conducted simultaneous raids on the offices of streaming giant Netflix in Paris and Amsterdam as part of an ongoing tax fraud investigation, French judicial sources revealed on Tuesday.

The raids are linked to an investigation initiated in November 2022, highlighting cross-border collaboration between France’s National Financial Prosecutor’s Office (PNF) and Dutch authorities. The PNF, a specialized unit known for handling significant financial crimes, is spearheading the French side of the probe.

Allegations of tax evasion and undeclared income

The investigation centers around allegations of “covering up serious tax fraud and off-the-books work,” according to officials. Netflix’s financial practices, particularly between 2019 and 2021, are under scrutiny as authorities seek to establish whether the company minimized tax payments during that period.

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French media reports previously noted that Netflix had reduced its tax obligations by reporting French-generated revenue in the Netherlands until 2021. This approach kept its declared French turnover at €47.1 million ($51.3 million) in 2020. After ceasing this practice, its reported turnover in France dramatically increased to €1.2 billion in 2021. Investigators are now examining whether similar profit-minimization tactics persisted beyond 2021.

Netflix’s response and European operations

While Netflix has not commented specifically on the raids, a spokesperson stated that the company complies with tax regulations in all the countries where it operates. The Amsterdam office, which serves as the headquarters for Netflix’s operations across Europe, the Middle East, and Africa, was included in the search effort as part of the comprehensive investigation.

Netflix first entered the French market over a decade ago and established its Paris office in 2020. The company currently boasts approximately 10 million subscribers in France, according to AFP.

Broader implications

The investigation into Netflix is part of a larger trend of European regulators scrutinizing the financial practices of multinational technology firms. It comes amid calls for more transparent tax reporting and the need for companies to align with national regulations to prevent profit-shifting practices that minimize tax liabilities. Authorities in both France and the Netherlands have emphasized their ongoing commitment to addressing corporate tax fraud, underscoring the potential legal and financial consequences for those found culpable.