I wonder how much it will actually change?
Amazon has become the first technology company to abandon controversial corporate structures that divert sales and profits away from UK in the face of a clampdown imposed by George Osborne.
From the start of this month the online retailer has started booking its sales through the UK, meaning resulting profits will be taxed by HMRC. The group made $8.3bn (£5.3bn) of worldwide sales from British online shoppers but for 11 years all these internet transactions have been booked in Luxembourg.
A spokesman said Amazon was “now recording retail sales made to customers in the UK through the UK branch. Previously, these sales were recorded in Luxembourg”.
Being the cynic that I am I can’t see it increasing their tax bill very much. On the grounds that if it had they wouldn’t be doing it.
The company said: “We regularly review our business structure to ensure that we are able to best serve our customers and provide additional product and services. More than two years ago we began the process of establishing local country branches of Amazon EU Sarl, our primary retail operating company in Europe.”
Sales are still being recorded by Amazon EU Sarl, a Luxembourg-registered company, but – crucially for tax purposes – will be booked in a UK branch of that company, for which a tax return must be filed with HMRC.
Yesd, but there will still be an entirely righteous royalty payment to be made from the UK company to the main, or Luxembourg or wherever, for the platform, the brand and so on. Something which, as long as it goes intra-EU, is not taxable in the UK.
5, 7%, wouldn’t seem out of order there. And I doubt their net margins are that high. I can imagine (but obviously don’t know) that this will make sod all difference. Which will be interesting in a year or two when we see their accounts and tax bill. Because if it doesn’t make much difference then Margaret and Ritchie and all will be shown to have been blowing smoke all these years.
A tecnial question: does bnooking the sales through a branch really have the same effects as the sales being by a UK co? Or is there some wriggle room there on things like royalties etc?