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eBay dodges £50m UK tax bill

eBay – the world’s biggest online auction site - has legally avoided paying £50m in corporate UK taxes.

The US company quite legally pumps money through Switzerland and Luxembourg meaning it pays little more than £1m in corporation tax, despite amassing some £800m in the UK in a year, The Sunday Times reports.

Accounts filed in the US by parent company eBay Inc, reveal that its UK subsidiaries enjoyed £789m in sales during 2010, according to the paper.

It found that by using a group-wide profit margin of 23%, UK profits would have amounted to £181m in 2010, the most recent year for which accounts are available. This would have then produced a corporation tax bill of £51m, but eBay’s four main UK-based subsidiaries paid just £1.2m in taxes for that year.

The Sunday Times said the tax position can be explained in part by the fact that fees paid by sellers using the auction site in the UK are passed on to a related company in Luxembourg called PayPal (Europe) Sarl, ensuring that most sales are channelled through a tax haven.

Accounts also reveal that eBay (UK) only provides “services” to a Swizz-based company, eBay International AG.

An eBay spokesman told The Sunday Times:

‘EBay Inc in Europe works with tax authorities and complies fully with all applicable tax laws and regimes — including national and internationally recognised rules.’

eBay now joins a growing list of global companies that have been rumbled for using entirely legal but complex legal systems to avoid paying UK corporation tax. Among them are Starbucks, Facebook and Apple.

Published 22 October 2012


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