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French and Dutch authorities raided streaming giant Netflix's offices in Paris and Amsterdam Tuesday as part of a tax fraud probe, a judicial official said.
The search of "various locations" in France by specialist financial investigators relates to suspicions of "covering up serious tax fraud and off-the-books work" and is part of a probe opened in November 2022, the source said. Netflix's Amsterdam headquarters for Europe, the Middle East and Africa was also targeted for a search by a team of officials from both France and the Netherlands.
"French and Dutch authorities have been cooperating on this criminal case for many months," the source said. Netflix is under investigation in France for its tax filings for 2019, 2020 and 2021.
Netflix insisted last year that it complies with tax law in all countries where it operates, after the probes were revealed in a media report. French outlet La Lettre A had reported that Netflix's French operation was structured until 2021 so that all subscribers signed up with a Dutch subsidiary -- thereby "minimizing its tax bill". That left it paying less than one million euros ($1.1 million at today's rates) in taxes to Paris across 2019 and 2020, when it had around seven million French subscribers.
Authorities are now trying to determine whether Netflix kept up illegal attempts to minimize its reported profits and thereby its tax bill, La Lettre A added.
The French subsidiary reported very low operating margins compared to the US mothership in 2021 and 2022, the outlet said, paying just 6.5 million euros in tax on its profits in 2022. But 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 A added.
Lewis Musonye
