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French Financial Crime Unit raids Netflix offices in Paris, Amsterdam in tax evasion probe

French and Dutch investigators on November 05 raided the offices of Netflix in Paris and Amsterdam in a tax fraud investigation, according to a French judicial source. The probe began in November 2022 and is being managed by France's Parquet National Financier, or PNF, a special prosecution unit focused on financial crime.

French investigators, specializing in financial crime and corruption, searched Netflix’s central Paris offices on November 05 morning. At the same time, Dutch authorities examined the company’s European headquarters in Amsterdam. According to the French judicial source, these searches followed months of cooperation between French and Dutch authorities. Dutch officials declined to comment on the matter, deferring to the PNF.

A Netflix spokesperson responded and said, “We are cooperating 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.” As of now, the preliminary investigation does not hint at criminal charges, neither does it assure the case will go to trial.

The probe has come at a time of controversy regarding Netflix's disclosed earnings in France. The firm has been alleged to have booked its earnings in France in its Dutch unit for 2019 and 2020. This has been reported by the news website La Lettre. For these two years, it is stated that Netflix paid less than €1 million in corporation taxes despite Netflix having registered huge numbers of subscribers in France. In 2021, this was stated to have ended.

Since Netflix stopped routing revenue through its local subsidiary, its French revenue skyrocketed. Corporate records show Netflix's French revenue jumped from €47 million in 2020 to around €1.2 billion in 2021. Netflix and the PNF haven't commented on the allegations of revenue routing.

The move is the latest probe from European authorities looking to check on the tax practices of big tech companies. Earlier, Netflix settled a tax dispute in Italy by paying €55.8 million in 2022.

Netflix opened its Paris office in 2020 close to the Opera Garnier and has around 40 employees in France. Besides the third-party contractors hired for French productions, Emily in Paris, among many series, has been produced with the support of local partners.