Dutch and French tax investigators conducted a parallel house search of Netflix on Tuesday. They investigate suspicions of tax evasion, and also suspicions of money laundering and illegal work in France.
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French media has given this report citing unidentified judicial employees and Dutch media has given this report citing the public prosecutor there. Netflix denies the allegations and insists that it follows all tax laws. In Italy, Netflix reached a settlement with the local tax authority two years ago and paid 55.8 million euros. Last week, South Korean tax authority officials visited Netflix’s branch there. South Korea has already punished Netflix for tax evasion, which Netflix has appealed.
The fundamental question at the heart of the conflict is where transnational corporations should be allowed to book their profits. In the case of Netflix, things are complicated by the fact that it buys the rights to films and series centrally for many countries. It sometimes produces its own titles and often produces films in multiple countries. The company then makes the results available to customers in many other countries. This opens up room for interpretation that sales from one country should be offset against costs in other countries, especially since Netflix does not rent individual titles, but charges a flat subscription fee for the entire portfolio and additional Generates advertising revenue. Computer games are also part of the offer.
Amsterdam Hub
Amsterdam is the headquarters of Netflix for Europe, the Middle East and Africa. Nearly half of all global membership revenue comes through this branch. However, the company sends more than 90 percent of it to its affiliates in other countries, which the Dutch tax office does not take lightly.
In the 2023 fiscal year, Netflix’s global tax rate was not to exceed 12.9 percent, or $800 million. The Netherlands has imposed a minimum 15 percent tax on global profits, but this will apply only to US companies from 2026. Nevertheless, tax investigators now want to know whether everything has been done correctly so far.
Netflix also filed French subscription fees through Amsterdam until 2020, which in turn was not agreed with the French tax office. In 2021, Netflix reported French subscriptions in France for the first time. This means that French sales increased from 47 million euros in 2020 to 1.2 billion euros in 2021, Huffington Post knowsNevertheless, tax investigators suspect that Netflix France may have continued to use abusive methods to reduce its tax burden.
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