Major U.S. streamer Netflix has responded following office raids by French and Dutch authorities over an investigation surrounding tax fraud and concealed employment.
Via Deadline, French news outlets Marianne and Libération reported that Netflix’s French and Dutch offices were raided over an investigation into alleged tax fraud and concealed employment. Deel describes concealed employment as hiring workers for jobs an employee would work, despite formally labeling them as independent contractors or freelancers. This often leads to those workers “missing out on benefits, protection, employee benefits like minimum wage, holidays, or overtime pay. In other words, the employer denies protection to workers who are entitled to it under the law.”
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Netflix Offices Raided Over Major Tax Fraud & Concealed Employment Investigation
The search was executed in France by the National Financial Prosecutor’s Office and the Central Office for the Fight against Corruption and Financial and Tax Offenses, and a cooperative effort by French and Dutch investigators in the Netherlands. It was triggered by a November 2022 tax audit that suggested Netflix’s taxes were far under expectations for its revenues from seven million subscribers. Marianne reported that the company paid €981k (US$1.06 million) in taxes for 2019-2020; it declared revenues of €47.1 million/$51.3 million the same year. French outlet La Lettre added that the streamer kept its taxes low by involving a separate unit registered in the Netherlands, stopping this in 2021 (via Reuters).
Netflix responded to Deadline following the report, 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.” McDonald’s ran into similar tax troubles in 2022, paying over a billion dollars to settle; Reuters also reported on Netflix’s previous tax troubles in Italy, agreeing to resolve a tax dispute by paying 55.8 million euros in 2022. Other multinational companies like Amazon have likewise faced controversy over overseas tax avoidance concerns. For years, the U.S. company had listed its Japanese facilities as warehouses, exempting it from corporation taxes despite the massive volume of money and sales moving through them. Since it changed its policy in 2016 to record Japanese sales in Japan, it paid 13x more taxes in 2017 and 2018 compared to 2014, via Nikkei.
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Tax offices aren’t the only organizations demanding that Netflix pays its fair share. In a report submitted to the Japanese government last month, the Association of Japanese Animations (AJA) called out a “global distribution provider” for its policy of only paying upfront licensing fees and no royalties. Netflix confirmed this practice last month in a separate earnings call.
Source: Marianne, Libération via Deadline, Reuters
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