eBay’s UK tax bill is under scrutiny

By Dan Wilson October 10, 2016 - 10:38 pm

According to accounts published on Friday, eBay in the UK has paid a weeny percentage in UK tax when compared to the revenues generated in the last tax year. eBay (UK) Ltd is reported to have paid £1.1m in tax in the UK on revenues of £1.1bn. (Cleverer people than me can calculate what that makes the total merchandise sales made via eBay over that period.)

But I bet there are more than a few UK eBay sellers, multi-channel merchants also using Amazon, who pay more than a million a year to HMRC.

You know how it’s done, from the details of your monthly eBay selling bill. Your fees are paid to eBay International AG and that’s based in Switzerland. You don’t pay eBay (UK) Ltd in Richmond.

We contacted eBay and received this comment: “In all countries and at all times, eBay is fully compliant with national, EU and international tax rules including those of the OECD.”

You can read the report in the Guardian here.

On one level, it’s surprising that to this point eBay’s tax affairs have not been subject to similar scrutiny experienced by Amazon, Starbucks, Google, Facebook and the like. And some of those firms have been called before the relevant House of Commons committee. Perhaps a similar interrogation awaits eBay.

On another level, the uproar that big firms take a lot out and put little in is entirely understandable. But equally the tax system in the UK allows them, quite easily, to funnel their earnings into tax efficient structures to limit their liability.

Every business should do that, as long as it’s all on the right side of the law and these approaches are legal it seems. Indeed, I’d go so far as to assert that a business has a commercial duty to exploit any clause or loophole that legally means they pay as little tax as is possible.

As we have said before: “they haven’t broken the law but the law may well be broken.” It’s just a shame, perhaps, that costs prohibit smaller business taking similar advantage owing to their scale. And it will be interesting to see how arrangements like this change after Brexit, currently scheduled for Spring 2019.

  • Lu
    9 months ago

    They’re not the biggest crooks.
    Facebook’s UK tax bill for 2014 was £4,327. Nobody was happy about it so Facebook promised to book some of its revenue in the UK and have it taxed here. Did they pay more taxes then? They generated a £11.3m UK tax credit.

  • Andy R
    9 months ago

    Ebay made this change to have billing registered in Luxembourg years ago.

    So why has it taken so long for HMG to notice this?

    By the way, remember who Ebay will get the money from if they’re forced to pay more taxes!

    • Gareth Barns
      9 months ago

      You can’t get blood from a stone. Senior management will have to take a pay cut.

  • glenn
    9 months ago

    there just as bad as the chinese/uk sellers avoiding tax , HMRC need to get this whole online sales tax compliant from the top to the bottom

  • Martin
    9 months ago

    Yes, it is wrong, but don’t blame Ebay. Blame our own tax laws that allow this. It is legal.

    It isn’t just a commercial duty, as you state. In the USA it is a fiduciary duty of company directors to ensure their company don’t unnecessarily pay money on tax, and I believe directors and companies can be sued for not doing this.

  • Eddie StClare
    9 months ago

    I queried eBays VAT status when they moved to Luxembourg, OK it only affects VAT registered sellers and eBay fees, but seeing that eBay would not raise the fees, I would rather claim back 20% of the fee total rather than the 15% (I think it is) of the current VAT refund,

    Yes, eBay would be liable for 20% VAT paid to the UK and not 15% paid to Luxembourg!

    • TINKER
      9 months ago

      you dont pay any vat on ebay fees at all if your vat registered and you register the fact with ebay

    • Eddie StClare
      9 months ago

      Yes you do, eBay fees are VAT inclusive, VAT sellers registered with eBay pay fees nett of VAT (Cross Border VAT), Non Vat sellers pay the fees as advertised – inclusive of 15% VAT.

      Hence my comment, I would rather pay fees less 20% than less 15%, with the bonus of ebay paying VAT to HMRC and not to Luxembourg

    • TINKER
      9 months ago

      i would rather just worry about my vat bill and not ebays

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