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    • Netflix is ​​facing a tax fraud investigation
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    Netflix is ​​facing a tax fraud investigation

    Online Niel Posted on

    Florence Loeve and Sudip Kar-Gupta
    | Reuters

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    PARIS, Nov 5 (Reuters) – Investigators raided the offices of U.S. streaming giant Netflix NFLX.O in France and the Netherlands on Tuesday as part of a preliminary investigation into tax-laundering, a French judicial source said.

    The French investigation, conducted by the Parquet National Financier (PNF) – a special financial crime prosecution unit known for pursuing high-stakes investigations that often involve large international companies – opened in November 2022.

    “We are cooperating with the authorities in France, where Netflix makes a significant contribution to the local economy, and we comply with the tax laws and regulations of all the countries in which we operate,” a Netflix spokesperson told Reuters.

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

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

    “Cooperation between the French and Dutch authorities has been ongoing for several months in these proceedings,” the French source said. The Dutch Financial Crimes Prosecutor’s Office declined to comment and referred questions to PNF.

    More: Netflix reports 15% revenue growth and announces it will no longer report membership numbers

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

    It was not immediately clear what prompted the investigation.

    Big technology companies that offer their online services and subscriptions across borders often face difficulties with European tax authorities.

    News site La Lettre reported last year that Netflix’s French subsidiary had come under scrutiny from tax authorities over its reported low turnover, which the agency said was inconsistent with paying user numbers in the country.

    Between 2019 and 2020, Netflix Services France paid less than 1.0 million euros ($1.09 million) in profit taxes by involving a separate entity registered in the Netherlands, La Lettre said, adding that the company stopped the practice in 2021.

    Corporate filings reviewed by Reuters showed that revenue at Netflix’s French unit rose to about 1.2 billion euros in 2021 from 47 million the previous year.

    More: Netflix subscriber additions likely down, growth strategy in focus

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

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

    In 2022, Netflix agreed to settle a tax dispute with Italy by paying €55.8 million.

    Netflix said on its website that it opened its Paris office, located just around the corner from the Opera Garnier, in 2020 and has hired about 40 employees.

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

    (1 USD = 0.9149 euros)

    Additional reporting by Toby Sterling in Amsterdam and Mathieu Rosemain in Paris; Written by Tassilo Hummel; Editing by Richard Lough, Ed Osmond and Sandra Maler

    Online Niel
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