Netflix paid no UK corporate tax last year – and got a €200k rebate

Netflix received a €199,000 (£174,000) tax rebate from the UK government last year and paid no corporation tax, despite making £500m in revenue from British subscribers to the streaming service.

The US company which has a market capitalisation of $174bn (£131bn) is bigger than Disney and almost six times the value of Sky. It booked a pretax profit of just €1.2m in the UK last year.

The company said it made €26.8m in revenue in the UK last year. However, with more than 8 million subscribers signed up by the end of last year – paying from £5.99 to £9.99 a month with £7.99 by far the most common package – Netflix UK took home about £500m (after sales tax) from British fans last year, according to Ampere Analysis.

Netflix reports low revenue figures in the UK because, similar to fellow US tech giants such as Google and Amazon, who also pay minimal tax, it positions the British operation as a service arm for its headquarters elsewhere in Europe. In Netflix’s case its revenues from subscribers are booked in the Netherlands.

The company, Netflix Services UK, is described as a “member of the Netflix corporate family and provides marketing and other support services to Netflix International BV”.

Netflix said it received the rebate because it made Brad Pitt’s War Machine in the UK. The UK government offers an attractive tax credit scheme to lure the makers of films and high-end TV shows to the UK.

The company’s accounts show Netflix directly employs 14 UK staff – four in administration and 10 in marketing – who were paid a combined €4.4m. This works out to €314,000 each, including a healthy €422,000 split between them relating to share-based payments.

The company said staff numbers have swelled to 37 to date and will hit 60 by the end of the year as it opens a new UK office next month.

It pointed out that it is a big investor in the wider UK creative economy, with more than 20,000 cast, crew and extras set to work on Netflix original and co-productions this year.

“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,” a spokeswoman said.

“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.”

The US company has another operation in the UK – Netflix Studios UK – set up in March, which will not file its first accounts until next year.