Online retailer eBay paid just £1.1m in tax in the UK last year, despite telling US investors that Britain was its second largest market, generating revenues of $1.4bn (£1.1bn).
The company appears to have reduced its tax bill by using a corporate structure that routes advertising fees from hundreds of thousands of British sellers through an overseas company, according to UK filings.
The group’s main UK unit reported revenues of just £185m last year and tax of only £1.1m. Latest accounts for eBay (UK) Ltd, which employs 372 staff, many of them at offices in Richmond, west London, confirm the British subsidiary does not receive a penny of the fees paid by UK sellers that advertise goods on eBay.co.uk.
Instead, the UK company’s revenues come from “the provision of services to eBay International AG”, its Swiss parent company. This Bern-based firm, which also uses a branch office in Luxembourg, is at the heart of eBay’s most significant operations outside of the US. It holds the key to hundreds of millions of dollars in tax savings the online auction group enjoys each year.
Like Google, Apple and other hi-tech multinationals, eBay routes income from customers in many of its largest markets, including the UK, through a European sales hub located in a tax-friendly country. The income can then flow into further controversial tax structures that ultimately wipe huge sums off the group’s tax bills.