×
You will be redirected back to your article in seconds

Report: Netflix Sets French Headquarters In Luxembourg to Bypass Regulations

Netflix expected to launch in France in the fall

PARIS — Netflix is set to follow iTunes and Google’s footsteps: The service is expected to launch in Gaul in the fall but will be headquartered Luxembourg in order to avoid the heavy French regulations.

French newspaper Les Echos reported the move will bring Netflix’s French outpost together with its other European headquarters — U.K., Ireland, Scandinavia and the Netherlands — which are also located in Luxembourg, a country boasting advantageous tax laws and incentives.

While Netflix has indicated its intent to expand further into Europe this year, the company has yet to tip its hand as to exactly where or when they will put down roots in new markets. A rep for the company declined comment.

Being based in Luxembourg will allow Netflix to be exempt from investing in French content and paying a value-added tax of 19.6% on VOD sales.

French VOD platforms like FilmoTV and Canalplay Infinity, which have annual revenues exceeding 10 million Euros, must inject 15% of their revs in European films and 12% in French movies.

Google and iTunes nab the bulk of VOD sales in France but they don’t contribute in local content and pay a 7% VAT (instead of 19.6% VAT) since they are headquartered in Luxembourg.

Over the last few months, Netflix execs met with French officials to discuss the launch and how local regulations would apply to the U.S. company if it chose to operate from Gaul. In a recent interview with Le Figaro, Culture minister Aurelie Filippetti said the French government, who’s been facing intense lobbying from local film guilds, had no leverage to have Netflix stream its content from France and comply to all its regulations from abroad.

The real deal-breaker for Netflix choosing a headquarter in Gaul were the investment obligations rather than the tax laws, according to r Les Echos.

Indeed, Netflix could end up paying French taxes even if it’s headquartered in Luxembourg: The European Union members have recently voted to obligate service providers to pay sales tax based on point of consumption/payment, rather than point of distribution, starting on Jan. 1.

Netflix will now certainly be looking for a French broadband partner to distribute its content on a wider scale.

“Given the strength of IPTV in France (France is one of the leading markets globally in terms of IPTV uptake), Netflix would be advised to explore partnership opportunities with the local IPTV operators, so that it can use their existing scale to build reach,” said Richard Broughton, senior analyst at IHS Screen Digest.

As previously announced, Netflix initiated discussions with Orange, which counts more than 10 million internet subscribers in France, last month. However, insiders claimed Orange wouldn’t sign a deal with Netflix if the service chose to be headquartered in Luxembourg.

Gaining access to strong local content with mass appeal in France will be the main issue for Netflix in Gaul, per Broughton.

“Many territories which Netflix has launched into have had strong preference for U.S. content, or at least a less well developed local content sector — Canada, U.K., Ireland are all English-speaking markets, while many consumers across the Nordics and Netherlands are well used to English-language content, or subtitled content,” the analyst explained.

And as Broughton pointed out, in France, the catalogue would have to include a higher proportion of locally-originated content – films/TV shows. That might prove a challenge if the service doesn’t invest in content as does pay TV giant Canal Plus, which operates the VOD platform CanalPlay Infinity.

Popular on Variety

More Digital

  • Gabrielle Carteris

    SAG-AFTRA Urges Gavin Newsom to Sign Law Punishing 'Deep Fake' Videos

    SAG-AFTRA National Executive Director David White is urging Gov. Gavin Newsom to sign legislation that institutes penalties for nonconsensual digital sexually explicit videos, also known as “deep fakes.” The legislation, Assembly Bill 602, targets companies and individuals who create and distribute the videos in California without the consent of the individual being depicted. “We urge Gov. [...]

  • Facebook Portal logo

    Facebook Is Launching a Portal TV Device: Here’s What We Know

    Facebook is getting ready to launch a TV streaming device in time for the holiday season, Variety has been able to confirm with multiple sources familiar with the company’s plans. The new streaming hardware will be part of the company’s Portal family of devices, featuring a camera, and combining video chatting with TV viewing and [...]

  • MoviePass card

    MoviePass Shuts Down, With Parent Company Citing Failure to Raise Funds

    MoviePass, the long-struggling theater subscription service, finally appears to be down for the count. On Friday, MoviePass notified remaining subscribers that it would be shutting down the service effective Sept. 14, 2019, because “its efforts to recapitalize MoviePass have not been successful to date,” parent company Helios and Matheson Analytics announced. “The company is continuing [...]

  • Disney Plus - Full Lineup

    How to Browse the Disney Plus Catalog the Company Is Testing in the Netherlands

    Disney began testing its Disney Plus streaming service in the Netherlands this week. Consumers in the U.S. will have to wait until November 12 to get access to the service, but European streaming aggregator JustWatch already makes it possible to browse the catalog available during this beta test. JustWatch is one of a number of [...]

  • JoJo Siwa'The Angry Birds Movie 2'

    Nickelodeon Star JoJo Siwa Gets Her Own Dance-Tour Mobile Game (EXCLUSIVE)

    Fans of JoJo Siwa will be able to join the teen influencer’s dance squad on stage — virtually — in a new mobile game. In “JoJo Siwa — Live to Dance,” players will become part of the Nickelodon and YouTube star’s worldwide tour on her professional dance team and experience what it’s like to be [...]

More From Our Brands

Access exclusive content