French Tax Officials raided Disney’s Paris Office. The tax investigation focuses on a fee that Disneyland Paris paid for use of Disney’s intellectual property. The same payment appeared to be associated with services provided by a U.K. unit tasked with managing “Disney activities in Europe, the Middle East and Africa since 2011,”.
The problem, in this case, is that the company’s decision to combine the two costs made it impossible for tax officials to confirm whether the pricing had been at arm’s length.
Disney lost four lawsuits it filed to challenge the order authorizing French tax officials to raid the Paris offices. The rulings noted tax authorities’ concerns spring from an audit of the Paris-based subsidiary’s tax filings from 2012 to 2015. More than 90% of the French Disney unit’s profit was sent to the U.K. during the first half of the decade.
Four years ago, The Walt Disney Co. was under fire after investigative reporters with the International Consortium of Investigative Journalists revealed the company sought to benefit from secret tax-saving deals in Luxembourg. This arrangement may have helped Disney reduce its tax payments in the U.S. and Europe, according to the report.