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Netflix diverted global profits to tax havens in 2018, think tank says

Netflix Inc. shifted as much as $430 million of profit from its global operations into low-tax jurisdictions in 2018, according to a report by investigative think tank Tax Watch UK.

The analysis claimed that Netflix structured its business to avoid paying tax. Its European operations are managed by Netflix International BV and its parent, Netflix International Holdings BV, which are both registered in the Netherlands, a known tax haven.

In the U.K., Netflix has 19 controlled companies. Its main entity Netflix Services UK Ltd. paid no tax in 2018 despite recording £860 million of revenues from an average of 9.71 million subscribers, according to the report. The Netflix unit reported revenues of about €48 million and pretax profits of about €2.3 million in 2018. Nevertheless, Netflix's UK companies were estimated to have claimed total tax relief of £924,000 in 2017 and 2018 due to investments in film production and high-end TV shows.

"This demonstrates a significant loophole when it comes to the administration of tax credits for multinational companies," the analysis said.

In a tweet, British MP and Shadow Chancellor John McDonnell said Netflix's tax structure shows how the company is "ripping off the public and our public services."

Netflix said it has always paid the required taxes in its countries of operation, London's The Guardian reported.

The streaming provider intends to spend more on producing British content in 2020, with a planned full takeover of Pinewood Studios Ltd.'s Shepperton Studios to cope with the production increase. It is facing a probe in Italy over tax evasion charges.