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Netflix accused of tax avoidance

January 15, 2020

Netflix is facing accusations of funnelling as much as £330 million (€385m) in profits made from operations outside the US into offshore tax havens, while receiving relief for making shows such as Black Mirror and The Crown in the UK.

Figures from the Taxwatch thinktank estimate that in 2018 the streaming giant moved between $327 million and $430 million in profits from international operations outside the US, including the UK, to low-tax jurisdictions such as the Netherlands.

Despite having over 10 million subscribers paying more than £860 million in subscription fees each year in the UK, Netflix UK still received a €57,000 (£51,000) rebate from the government in 2018. The company’s UK financial filing stated revenues of just €48 million, and pre-tax profits of €2.3 million, because the hundreds of millions of pounds from British subscribers are channelled via its European HQ in the Netherlands.

Netflix, which has a market value of $150 billion, also claimed £924,000 in tax relief as part of government incentives to make sure Britain remains a competitive location for making productions, according to Taxwatch. Premium TV shows made in the UK that cost in excess of £1 million per episode to make, such as The Crown, and films that pass a ‘cultural test’ are eligible for relief. Netflix, which has more than 200 staff in the UK, spent $500 million making some 50 TV shows and films in the UK last year.

“This research shows that Netflix is ripping off our public services by channelling profits through tax havens even though it appears to have employees, property, and a substantial customer base in the UK,” said John McDonnell, the shadow chancellor.

Netflix said: “Corporate taxation is an important and much-debated issue. Ultimately, it’s for governments to decide the rules when it comes to tax — and in every country in which we operate, Netflix respects those rules.”

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