Netflix: Streaming giant’s French subsidiary faces tax scrutiny

American streaming giant Netflix has been the subject of a tax audit in France since 2022, covering the fiscal years 2019, 2020 and 2021 of its tricolor subsidiary, according to information from letter A, confirmed to AFP on Wednesday by a source close to the case.

“We comply with the tax rules of all the countries in which we operate worldwide,” a Netflix spokesperson told AFP Wednesday. “At the same time, we support the reform of the international tax system to provide a clear basis for companies operating in an increasingly digital world,” added a representative of the group, who arrived in France in 2014.

Until 2021, Netflix “has minimized taxation by declaring its turnover in France in the Netherlands”, its customers enter into an agreement with a Dutch company, writes Letter A. “Between 2019 and 2020 Netflix Services France”, which already had 7 million subscribers in France. thus paid “a total of 981,000 euros in income tax”.

Following the abandonment of this financial agreement in 2021, Netflix’s reported turnover in France jumped from €47.1m in 2020 to €1.2bn, then to “€1.3bn”, “euro in 2022” when the bar 10 million tricolor subscribers crossed out.

In the event of abuse, Bersi can decide on damages.

Looking to fiscal year 2021, “tax officials intend to check whether (…) Netflix continues to abuse its profit minimization,” letter A explains. , released by the platform in France in 2021, and 20% of its US parent company, ensuring that “this gap will continue into 2022,” a year in which the company “paid out just €6.5 million in profits.”

By “re-exposing a significant portion of its turnover to other Netflix businesses overseas,” the firm engages in “legitimate tax optimization practices under certain conditions,” letter A explains. In the event of abuse, Bercy may decide to collect taxes. , as has happened in recent years with other digital giants, including Google.

For its part, Netflix enforces French regulations by honoring its investment in creation, paying the full rate of VAT, and contributing up to 5.15% of its turnover to CNC. With over 238 million subscribers worldwide, Netflix achieved $8.2 billion in revenue in the second quarter of 2023.

The General Directorate of Public Finance (DGFiP) was contacted without comment.