Netflix is in the process of dismantling the financial package that allowed it to pay extremely little tax in France. From 2021, all French subscriptions will be subject to French taxation. The firm of Reed Hastings obviously wishes to bury the hatchet with the French creation.
Do you remember the 564,174 euros in taxes paid by Netflix in France in 2019? Unfortunately, Netflix has many large American firms using rather aggressive tax optimization techniques that allow it to pay as little tax as possible. Currently, when a French subscriber subscribes to Netflix, they are actually paying Netflix International BV, a company registered in the Netherlands.
The French branch of the group, it records only a modest turnover on the basis of which the tax is calculated. Still, it seems Reed Hastings’ group has no intention of letting the situation continue. Despite the tens of millions of euros that this method allows him to save, in France alone, every year. Netflix is indeed a disruptive player with rapid growth that is profoundly changing the film industry.
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Netflix abandons tax optimization to get closer to French creation
But initially, Netflix rather projected itself against the grain of the actors and established practices of the sector for decades. The streaming platform has tackled the media chronology in particular, going so far as to show films in Cannes that will never be released in theaters. This ended up leading to a temporary exclusion from the festival. A situation undoubtedly worsened by this status of newcomer who does not participate financially in French creation as much as other audiovisual players.
According to Capital, Netflix France’s turnover is around 800 million euros. With this change in structure, which will take effect in January 2021, Netflix could therefore pay the tax authorities nearly 25 million euros per year – at a rate of 33.3% which is probably unrealistic. So the estimates are based on range between 10 and 25 million euros. Which is already much more suitable than the half a million paid by the group in 2019.
In addition, it should be noted that we are only talking about income tax here. Netflix already pays 20% VAT on online services, and a tax of 5.15% of its turnover to the CNC. The platform will also soon have quotas to respect, investing between 20 and 25% of its turnover in European films and series, of which 85% in content made in France.
“After the opening of our office in Paris in January 2020 and the launch of more than 20 locally produced films and series, this development confirms our long-term commitment alongside the French creative industries”, comments Netflix.