Netflix Avoided Paying UK Corporation Tax Despite 4.5m Subscribers

by - 5 years ago

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Video-on-demand streaming service Netflix has witnessed a rapid rise in popularity in the UK since its launch there in 2012, boasting 4.5 million subscribers at last count, each paying a minimum of £5.99 a month, and yet the company did not pay a penny in corporation tax to the UK last year, according to a report in The Sunday Times (paywalled, via The Guardian).

Netflix brought in £200 million in revenue in 2014, but its profits were filed overseas, allowing the company to bypass paying any tax into the UK’s coffers. At the time, Netflix International BV was based in Luxembourg, meaning that the only tax it was legally liable for was 5% income tax to Luxembourg. The company has not broken any law, but is merely using an available loophole in UK tax policy to avoid any levies within the country.

A spokesperson for Netflix maintains that, while it continues its current international expansion plans, that it is making a loss overall. The spokesperson also added that its UK operation only employs 12 people and that it is “fully compliant with all applicable rules.”

The UK is Netflix’s second biggest market, after the US which boasts over £40 million subscribers, and is predicted to inflate its British customer base to 9.5 million by 2020.

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