Tax fraud investigators search Netflix offices in Paris and Amsterdam, says source

By Florence Loeve and Sudip Kar-Gupta

PARIS (Reuters) -Investigators searched the offices of U.S. streaming giant Netflix (NASDAQ:) in France and the Netherlands as part of a preliminary investigation into tax fraud laundering, a French judicial source said on Tuesday.

The French investigation, carried out by the PNF, a special financial crime prosecution unit notorious for pursuing high-stakes white-collar probes that often involve large international companies, was opened in November 2022.

Representatives for Netflix in France and the Netherlands did not immediately respond to Reuters phone calls and e-mailed requests for comment.

Investigators specialising in financial crime and corruption raided the company’s offices in central Paris on Tuesday morning.

Dutch authorities were simultaneously searching the company’s European headquarters in Amsterdam, the French judicial source said.

“Cooperation between the French and Dutch authorities has been underway for many months as part of these proceedings,” the French source said. The office of the Dutch prosecutor for financial crime declined to comment and referred questions to the PNF.

A preliminary investigation in France does not imply criminal charges and does not necessarily lead to a trial.

The facts which led to the investigation were not immediately clear.

Large tech companies offering their online services and subscriptions across borders often run into difficulties with European tax authorities.

News website La Lettre reported last year Netflix’s French subsidiary became the subject of scrutiny from tax authorities over its low reported turnover, which the media said was at odds with paying user numbers in the country.

Between 2019 and 2020, Netflix Services France paid less than one million euros in corporate taxes, by involving a separate unit registered in the Netherlands, La Lettre said, adding the company stopped the practice in 2021.

Corporate records reviewed by Reuters showed the revenue of Netflix’s French unit surged to around 1.2 billion euros in 2021, from 47 million the year before.

Netflix in France did not respond to a request for comment on the alleged reporting of revenues through Amsterdam rather than France in 2019 and 2020.

The PNF declined to give details on the scope of its investigation.

In 2022, Netflix had agreed to settle a tax dispute with Italy by paying 55.8 million euros ($60.78 million).

Netflix said on its website it opened its Paris bureau, located just around the corner from the Opera (NASDAQ:) Garnier, in 2020 when it employed around 40 staff.

The company produces most of its original films and series, including the global blockbuster Emily in Paris by working with third-party contractors.

($1 = 0.9180 euros)

(additional reporting by Toby Sterling in Amsterdam, writing by Tassilo Hummel; Editing by Richard Lough and Ed Osmond)