Netflix pledges to start declaring full $1bn+ UK tax revenues

The Crown

Netflix is to start declaring the more than £1bn ($1.3bn) it makes from British subscribers to UK tax authorities, after facing increasing political pressure and questions around its low tax bill.

The move is expected to increase the amount that the streamer pays in UK corporation tax, with Netflix’s UK holding company, Netflix Services UK, declaring just $48m in revenue in its most recent UK earnings report in 2018 – despite having made an estimated £700m from its then roughly 10million UK subscribers.

This is due to Netflix’s UK operations providing services to Netflix International, which collects revenue from British subscribers and is based in the low tax zone of the Netherlands.

In the same year, the streamer, which has a market value of $215bn, received a $57,000 tax rebate from the UK government.

The service costs between £5.99 and £11.99 per month in the UK and revenue is estimated to reach £1.14bn this year, rising to £1.3bn next year should Netflix UK attain its forecasted 14 million subscribers.

“As Netflix continues to grow in the UK and in other international markets we want our corporate structure to reflect this footprint,” a Netflix spokesman told The Guardian newspaper, which first reported the story. “So from next year, revenue generated in the UK will be recognised in the UK, and we will pay corporate income tax accordingly.”

The news comes just days after the streamer revealed that it has increased its spending on UK productions to £750m this year, with Netflix producing more than 50 TV shows and films in the UK in 2020, despite the shutdown caused by coronavirus restrictions.

One of these UK-made shows, The Crown, has also come under scrutiny from the UK government this week, with culture secretary Oliver Dowden saying that the historical series should carry a disclaimer making it clear that it is partly a work of fiction.

The series, which is produced by Left Bank Pictures, explores the history of Britain’s royal family. Dowden told The Mail On Sunday that “I fear a generation of viewers who did not live through these events may mistake fiction for fact.”

The show was also recently called out by Oz broadcaster ABC for historical inaccuracies, including inventing fictitious comments from former Australian prime minister Bob Hawke.