Netflix is set to begin declaring its U.K. revenues to local tax authorities in the new year — a move that follows similar initiatives in Western Europe in recent weeks. Until now, the streaming giant had channelled its revenues through the Netherlands, a lower tax jurisdiction and the site of its European headquarters.
The SVOD confirmed to The Guardian, which first reported the news, that it will make the move in 2021. “As Netflix continues to grow in the U.K. and in other international markets, we want our corporate structure to reflect this footprint,” said a company spokesman. “So from next year, revenue generated in the U.K. will be recognized in the U.K., and we will pay corporate income tax accordingly.”
Netflix has declared British revenues into the Netherlands since launching in the U.K. in 2012. The SVOD has amassed close to 13 million subscribers in the country, and it’s believed U.K. revenues will reach around £1.14 billion ($1.5 billion) this year.
In its last full accounts filing on Companies House, for 2018, Netflix U.K. reported just €48 million ($57 million) in revenues. That year, it received a €57,656 ($68,978) tax credit. According to The Guardian, which cited thinktank TaxWatch, the company moved between $332 million and $439 million in international profits to low-cost tax jurisdictions like the Netherlands in 2018.
In the U.K., corporation tax is paid on profits and not revenues. Nonetheless, it’s believed that reporting into the U.K.’s HMRC authority will see a rise in how much Netflix must pay in corporate tax.
The U.K. is a top priority for Netflix, which is doubling its local content spend to $1 billion and producing more than 50 shows out of the country.
Last week, Netflix revealed it will begin billing Spanish customers in Spain, rather than from the Netherlands. Meanwhile, Netflix will start declaring its revenues from France to the local tax administration starting in January.