For a tax optimization package in France, the company The Walt Disney Co. France SAS will have to pay 88 millions of euros to the tax authorities . According to revelations from the media Capital , the end of a procedure lasting several years has just sounded for the subsidiary of the American group. A case that is revealed in a little more detail after years of arm wrestling.
French profiles, sent to England, tax-exempt thanks to the Cayman Islands
What has happened since 2013 at Disney France? The French subsidiary, which is responsible for the distribution of films in theaters and to television channels and which manages the licenses for the brand and the characters, has found a solution to pay much less than taxes in France .
The 70 millions of euros of adjustment tax would relate to a package comprising a British company, called The Walt Disney Co Ltd , a holding company declared tax resident in the Cayman Islands until 2014. In essence, the majority of the operating margins of the French subsidiary would have been paid – and disguised as a royalty – to the English entity.
Consequently, the profits earned by Disney in France would have been tax-exempted initially, before being subject to the English tax rate of 19% (lower than France) from 2014.
Questioned by the tax authorities , Disney did not wish to answer the question of the distribution of the royalty according to the two main explanations of the payments of the company to the British holding company: advice on strategy and exploitation rights. Disney wants “to make the compensation received by the French subsidiary opaque” , declared the French tax authorities, working in a coordinated manner with the English tax authorities.
Other problems brought to light by the tax authorities, concerning the operating margins of the French subsidiary for its subtitles and dubbing, or the license revenues from brands such as its contract with Carrefour, have made it possible to tip the scales in the matter, to the detriment of Disney. In 2019 again, the subsidiary announced only 4% of operating margin , that is to say a very weak which denoted the good health of the group. In the end, Disney would have spent more than 88% of these margins in its assembly and its payments as a royalty.
After a year 2019 of 9.6 million euros in taxes, Disney had to pay some 70 millions in 2020 for its financial year 2020.