Etsy paid less than £200k in UK tax despite sales of £160m

By

Nigel TAYLOR

Published
Jun 21, 2022

US online marketplace Etsy has been accused of paying too little tax in the UK. A final 2020 bill of just £128,000 in corporation tax falls way short of a near-£7 million estimation had it booked all its £160 million sales at Etsy UK, according to research by campaign group TaxWatch.

The vast majority of its UK sales are booked in Ireland where they attract a lower tax rate, according to Etsy’s US stock market filings. The filing also noted that the UK is its most important market outside of the US, accounting for over 10% of the company’s takings.

It’s a system similar to that used by other US tech companies including Facebook, Google, Apple and Microsoft. Amazon, which books much of its UK business via Luxembourg, reportedly paid £492 million in UK tax last year on sales of over £20 billion. 

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Although tax laws are not being contravened, they raise ethical questions about where profits are generated and how much tax is paid.

Growth in Etsy’s UK earnings has been huge, rising from $51m (£40.1m) in 2018 to $329m (£243m) in 2021, an increase of more than 600%. The group also bought UK-based secondhand fashion site Depop last June, adding millions more in sales from the UK.

George Turner at TaxWatch said: “Despite Etsy’s ethical pretensions, it is in fact just another US tech company using the same tax structures as other US tech companies to move profit out of the UK and into tax haven Ireland.

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

An Etsy spokesperson told the Guardian newspaper that the company had “paid or accrued for any known and material tax obligations in compliance with current 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 across many critical business functions, like software and product engineers, payments operations, technical project managers, and member support.”

Etsy said it endorsed the Organisation for Economic Co-operation and Development’s (OECD) attempt to “create a more equitable and simple model” for cross-border taxation and added: “We are very supportive of a global consensus on how to tax the digital economy even if our tax bill increases.”