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Etsy only paid £128,000 in UK corporation tax in 2020 despite £160m in sales | Technology sector

Online marketplace Etsy paid just £128,000 in UK corporation tax in 2020 despite selling $195.8m (£160m) as it routed business via Ireland.

The Brooklyn-based company would have been liable for corporation tax of almost £7million if it had registered all UK sales with its local entity, Etsy UK, according to research by the group the country. TaxWatch.

Instead, the vast majority of UK sales – the total of which are revealed in Etsy’s US stock market filings – are recorded through an Irish company, where they enjoy a lower rate of tax. . The tactic is similar to that used by a series of US technology companies, including Facebook, Google, Apple and Microsoft. Amazon delivers much of its UK business via Luxembourg. There is nothing illegal about such structures, but they do raise ethical questions about where profits and taxes are paid.

Etsy, which was listed on the US-based Nasdaq stock exchange in 2015, is liable for UK Digital Services Tax, which would have been around £2.4 million for 2020 according to TaxWatch, but that amount is still a long way off. of its calculation for companies. tax due if all UK sales had been registered here and not booked in Ireland.

Since then, Etsy’s sales have jumped 68% in 2021 to $329 million, hitting a level more than six times higher than in 2018. The group has also bought the second-hand fashion site based in UK Depop in June last year, adding millions more UK sales to its books.

George Turner of TaxWatch said: “Despite Etsy’s ethical claims, this is really just another US tech company using the same tax structures as other US tech companies to shift profits out of the UK. United towards the Irish tax haven.”

Turner said Etsy’s current tax bill in the UK could go down further as the digital services tax could be scrapped as part of a global tax deal arranged through the OECD.

Etsy is unlikely to be liable for an OECD-backed global minimum corporate tax on global businesses with sales of more than €750m (£643m) – which are expected to account for 15% of income. Under these plans, businesses that use tax havens will face an additional tax burden in their home country — the United States in Etsy’s case. Under current plans, only companies with more than $20 billion in revenue — compared to Etsy’s $2 billion to $3 billion — would be forced to pay additional taxes in the countries where they make their money.

Etsy declined to comment on details of TaxWatch’s calculation of its UK tax liability, but it is understood the company paid digital services tax in the country in 2020 and 2021.

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An Etsy spokesperson said the company has paid or payable for any known and material tax liability in accordance with applicable cross-border tax laws. Cross-border corporate tax law is extremely complex, and Etsy is committed to paying our fair share.

“Ireland is the location of our international headquarters, where we employ dozens of people who support our international community in many critical business functions, such as software and product engineers, payment operations, project managers techniques and assistance to members.”

Etsy said it endorses the OECD’s attempt to “create a fairer and simpler model” for cross-border taxation and added, “We strongly support a global consensus on how to tax the digital economy even if our tax bill increases”.

Rodney N.

The author Rodney N.