French and Dutch authorities have conducted raids on Netflix offices as part of a widening investigation into alleged tax fraud and labour law violations. The surprise searches, carried out on Tuesday morning, marked a significant escalation in the probe that began in November 2022.
Investigators from France’s central office against corruption and financial and tax crimes, alongside members of the National Financial Prosecutor’s Office, executed the coordinated searches at the streaming giant’s locations in Paris and Amsterdam. The investigation centres on suspicions of “aggravated tax fraud laundering and infractions of labour law”.
The crux of the investigation appears to focus on Netflix’s financial structuring between 2019 and 2021, when the company channelled French subscription revenues through its main European subsidiary in Amsterdam. The arrangement shifted in 2021, with Netflix’s French subsidiary beginning to receive local subscriber revenues, though it continued to pay service fees to its Dutch headquarters.
The scale of the financial implications is substantial, with Netflix’s declared turnover in France soaring from €47.1 million in 2020 to €1.2 billion in 2021 following the revenue booking restructure. French authorities had previously conducted a tax audit of these arrangements two years ago.
Netflix maintains its position of compliance, with a company spokesman stating: “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”.
The investigation reflects a broader French regulatory crackdown on multinational corporations’ tax practices. This follows successful actions against other global giants, including McDonald’s, which paid a €1.25 billion fine in 2022 to avoid criminal prosecution for tax fraud.
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