Netflix corporation tax bill was zero last year despite millons of customers, report claims

Lynsey Barber
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Netflix is the latest company to face scrutiny over its tax arrangements as it was revealed that it paid no corporation tax in the UK last year, reports claim.

It's estimated the TV and film subscription service known for Emmy award winning shows House of Cards and Orange is the New Black, made £200m in revenues from its five million uk customers.

However, that cash went through its subsidiary in the Netherlands, meaning no earnings were taxable in the UK, according to an investigation by the Sunday Times.

Read more: Cadbury and the incredible shrinking corporation tax

According to the documents seen by the newspaper, Netflix International made profits of £11.3m in the year to the end of 2014 on turnover of £415m. It paid tax of nearly £600,000, a rate of five per cent, in Luxembourg where it was then based. The UK is understood to be its most lucrative market in Europe.

According to its latest filing in the UK, it made operating losses of €261,149 (£190,565) and received a tax credit of €47,986 between June and December last year.

A Netflix spokesperson told the newspaper it employs around 12 people in the UK and will pay corporation tax this year. It said that it did not make large global profits as it was focused on expansion, and that it is fully compliant with all applicable rules. The company could not be reached for further comment at the time of publication.

Cadbury owner Mondelez and Facebook are among those to come under fire for using the legal but controversial tax arrangement.The most high profile company to avoid paying corporation tax in the UK has been Starbucks, which last week paid £8m after record profits, only its second since 1998, it has claimed.

Read more: Facebook's UK tax bill cost less than this annual commute

A recent landmark tax ruling in Europe effectively put and end to so-called "sweetheart" tax deals where companies can make individual agreements with governments over the rate of tax they pay, after the courts ruled it amounted to illegal state aid.

It comes amid attempts at a global clampdown on tax arrangements by chancellor George Osborne and other G20 countries, and efforts to stop multinational firms from using such schemes.

However, Labour shadow treasury minister Richard Burgon criticised George Osborne and told him to "get a grip" of the issue.

"George Osborne needs to get a grip of this issue in the new year, as after being chancellor for 5 years he has no one else left to blame but himself. Many families will be paying to sit down together this Christmas to watch programmes on Netflix and won't expect that the money they give may be undermining British businesses. Because it’s the businesses and taxpayers who pay their taxes who have to carry the burden for those who do not."

The UK has one of the lowest corporate tax rates in Europe at 20 per cent and is due to be cut to 18 per cent by 2020.

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