The French tax authorities are interested in the accounts of Netflix. The American streaming giant has been the subject, since 2022, of a tax audit relating to the 2019, 2020 and 2021 financial years of its tricolor subsidiary, according to information from Letter A, confirmed by AFP this Wednesday, August 30.
“We comply with the tax rules of all the countries in which we operate around the world,” reacted a spokesperson for the group, who arrived in France in 2014. “In parallel, we support a reform of the international tax system to provide a clear framework for businesses operating in an increasingly digital world.”
Until 2021, Netflix “minimized its taxation by declaring its turnover in France in the Netherlands”, its customers contracting with a Dutch company, writes Letter A. “Between 2019 and 2020, Netflix Services France”, who already claimed 7 million subscribers in France, thus paid “only 981,000 euros in tax on profits”.
After the abandonment of this financial arrangement in 2021, the turnover declared in France by Netflix jumped from 47.1 million euros in 2020 to 1.2 billion euros, then to “1.3 billion euros”. ‘euros in 2022’, when the bar of 10 million tricolor subscribers was crossed.
Looking at the 2021 financial year, “tax officials intend to verify whether […] Netflix has not continued to improperly minimize its profits”, explains Letter A. It cites in particular the discrepancy between the “margin operational microscopic”, of less than 2%, released in France by the platform in 2021, and that of its American parent company, of 20%, ensuring that “this gap persisted in 2022″, a year on which the company has ” paid only 6.5 million euros in profits”.
“By re-invoicing a large part of its turnover to other Netflix entities abroad”, the firm engages in “a practice of legal tax optimization” under certain conditions, explains Letter A. of abuse, Bercy could decide on a recovery, as has been the case in recent years for other digital giants, including Google.
With over 238 million subscribers worldwide, Netflix earned $8.2 billion in revenue in the second quarter of 2023.
Contacted, the Directorate General of Public Finance (DGFiP) did not comment.