Netflix paid no UK corporation tax last year despite being estimated to have around 4.5m subscribers in the country, it has been reported.
The video streaming service behind award-winning series such as Orange is the New Black and House of Cards charges customers a minimum of £5.99 a month to subscribe and has grown rapidly since its UK launch in 2012.
According to a Sunday Times investigation, it generated an estimated £200m of revenue in Britain last year but any profits from the UK in 2014 were booked overseas. There is no suggestion that Netflix has broken the law.
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The paper reported that latest accounts for Netflix International BV, which was based in Luxembourg until the end of last year, show a net turnover of £415m and profits of £11.3m in 2014, with British customers accounting for the largest proportion of turnover. It says the company paid income tax in Luxembourg of £573,396, equivalent to a rate of about 5%.
The company says it is in “expansion” mode and is making overall losses on its international operation. A spokesman said its British subsidiary employs about 12 people and will pay some corporation tax this year, adding: “We are fully compliant with all applicable rules.”
In July, it was reported that despite having more than 65m subscriptions worldwide the cost of third-party content on Netflix was $7.7bn (£5.2bn), about 4.6 times its net revenue.
Earlier this month, Mondelez, which owns Cadbury, was reported to have paid zero UK corporation tax last year. By contrast, Starbucks, which was widely criticised over corporate tax avoidance in 2012 following details of its meagre tax contribution, revealed last week it has paid £8.1m corporation tax this year, nearly as much as it paid in its first 14 years in the UK, after bowing to pressure to scrap its complex tax structures.
The UK is believed to be Netflix’s biggest market outside the US, where it has more than 40m subscribers, with the number of British subscribers predicted to reach 9.5m by the end of the decade. The company has been facing increasing competition from rival streaming services such as Amazon, Hulu and HBO in the US. In the UK, Amazon Prime is Netflix’s closest rival.
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