Netflix’s crown slips over tax avoidance claims

Netflix’s Crown slips over tax avoidance claims

Netflix’s tax arrangements have again come in for scrutiny after it emerged that not only did the streaming service manage to pay zero UK corporation tax over the last financial year, but that it also wrangled a £174,000 rebate from the government.

The entertainment provider earns around £500m per annum from British subscribers, fueling a global market capitalization of £131bn, but recorded a pre-tax profit of a paltry €1.2m last year.

Netflix achieved this feat by classing its UK business as a service arm of its Netherlands HQ, routing revenues offshore in a similar controversial fashion to the likes of Google and Amazon. The savvy firm was in fact able to earn money from the government by taking full advantage of a tax credit scheme designed to draw film and TV production to the UK.

In a statement Netflix wrote: “We are investing hundreds of millions in the UK entertainment industry, with close to 40 projects under way this year including new seasons of The Crown and Black Mirror and co-productions with British broadcasters.

“Netflix is contributing to the UK economy in many different ways, including generating significant amounts of VAT for the UK government through the provision of our service to UK-based subscribers.”

Netflix is in the midst of a hiring spree with the aim of nearly doubling staff from 37 to 60 as it prepares to open a UK office in July.

Last year Amazon was forced to defend paying tax of just £15m in Europe on £19.5bn in revenues.

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