Netflix gets €57,000 tax rebate in the UK as binge-watching boosts profit
Netflix has received a €57,000 (£51,000) tax rebate from the UK government last year, even as the success of hit shows such as The Crown and Stranger Things drove a rise in profit.
The tax credit, granted as an incentive to produce films and TV shows in the UK, follows a rebate of €199,000 in 2017.
Read more: Netflix boss says The Crown will ‘look like a bargain’ as streaming battle begins
Netflix’s UK arm pulled in revenue of €48m and pre-tax profit of €2.3m in the year to the end of December amid growing demand from binge-watching Brits.
The figures represent a fraction of the company’s true revenue, as most of its income is booked through its European headquarters in the Netherlands.
Netflix has more than 10m subscribers in the UK paying between £5.99 and £11.99 per month, giving it an estimated annual revenue of £700m, according to research firm Ampere Analysis.
But its UK division, which employed just 29 people at the end last year, acts as a service business to the European headquarters.
The complex corporate structure has drawn criticism amid concerns that Silicon Valley tech giants such as Netflix, Amazon and Google are not paying their fair share of tax.
The UK has outlined plans for a tech tax similar to the three per cent levy approved by the French government earlier this year.
However, the digital services tax, which is set to come into force next year, is not expected to apply to content-producing companies such as Netflix and Spotify.
In addition, the Treasury offers tax credits for the creative industries in a bid to encourage film and TV companies to set up shop in the UK.
Netflix has ramped up its British productions in recent years, and has filmed hit series such as The Crown and Sex Education in the UK.
Separate filings for Netflix’s studio division showed the company has splashed out more than £232m on leases for studio space since the end of last year.
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The company is set to open its huge UK production hub at Shepperton Studios in the coming months following a major deal with Pinewood, and has also secured new studio space in Uxbridge.
The increased investment comes as Netflix gears up for a new slate of rivalries, with Disney and Apple both set to enter the streaming wars next month.
Main image credit: Netflix