Netflix has announced that it plans to disclose its actual UK earnings amid mounting political pressure on the streamer and reports that it is investigating its low-tax bill.
“As Netflix continues to grow in the UK and other international markets, we want our corporate structure to reflect that footprint,” a Netflix spokesman told The Guardian. “Starting next year, UK revenues will be recorded in the UK and we will pay corporate tax accordingly.”
Netflix’s UK holding company, Netflix Services UK, had sales of just € 48m (USD 57m / £ 43m) in 2018 – the most recent result in the UK – despite the streamer having an estimated 10m UK subscribers at the time would have.
This is because Netflix’s UK company provides services to Netflix International based in the Netherlands, which ultimately generates revenue from UK subscribers.
The think-tank Tax Watch estimated that Netflix’s actual revenue in 2018 is expected to be £ 860 million, or $ 1.1 billion – a figure that according to the audience Barb, will have jumped to 13 million.
It’s hard to say how higher income translates into taxable profit. While earnings are likely to rise, the picture is complex, and Netflix’s international business has historically been loss making due to investments in technology and human resources.
Netflix received a tax credit of € 57,000 in 2018. British lawmaker Dame Margaret Hodge accused the company of “highway robbery”. Hodge is a past chairman of the UK Parliament’s influential public finance committee.
Netflix’s revenue change will go into effect in January. According to The Guardian, the company will inform its UK customers of the decision. Regardless, Netflix announced this week that it will be spending $ 1 billion on UK content this year.