Two Dutch companies that control Uber’s UK operations had no employees over a year after the cab-hailing app launched in London, even though UK fare revenue is funnelled through one of them, according to documents obtained by Business Insider.
A European member of parliament told Business Insider that the car-hailing app’s business appears to have been “specifically designed, from the start, to reduce its tax liabilities.”
Uber runs all of its European operations from the Netherlands. The company has been accused of using the country as a tax haven, skirting corporation tax and value added tax (VAT) by processing revenue from Uber rides in places like London through its Dutch subsidiaries, where there is a lower tax rate.
An investigation by Business Insider into Uber’s Dutch businesses shows that Uber BV, the company that issues invoices for UK rides and handles the revenue from UK fares, had zero full-time employees as of December 2013, the most recent period the Dutch Chamber of Commerce has accounts on.
Uber International Holding BV, which owns Uber’s London operations, also had zero employees up to December 2013. In the same period, Uber’s UK-registered company came under control of the Dutch business, according to filings with Companies House. Prior to that, it was controlled by the original Uber Technologies in the US.
A spokesperson for Uber told BI: “In 2013, all international employees based in our headquarters in Amsterdam were contracted to a Dutch company that wholly owned Uber BV. We restructured, and today there are more than 150 employees of Uber BV.”
Subsequent inquiries with the Dutch Chamber of Commerce suggest Uber employed eight people in Amsterdam across its network of companies during the period examined.
But the two companies directly tied to Uber’s UK operation — Uber BV and Uber International BV — didn’t employ any of them, raising questions about why revenues and company ownership were routed in such a way.
We’ve highlighted before that Uber’s UK fares are processed through a Dutch subsidiary. This means revenues and profits from the UK company, which might be liable for corporation tax, end up in the Netherlands. Uber BV’s 2013 accounts show it had $51.2 million on its balance sheet.
The most recent accounts for Uber’s UK-registered operation show it made a £888,436 pre-tax profit on revenues of £11.2 million in the year to December 31, 2014, according to DueDil. It marks a 951% increase in revenue on the year earlier.
Here’s a screenshot of Uber BV’s 2013 accounts from the Dutch Chamber of Commerce’s website, with the employee figure highlighted:
Here are the accounts of Uber International Holding BV, which owns Uber UK:
While the accounts are out of date, they do cover a period in which Uber was operating in the UK. Uber launched in London in June 2012, with the two Dutch subsidiaries examined here opening months later. They are also the most recent accounts available.
Anneliese Dodds, a Labour Party MEP for the South East, told Business Insider via email: “It is especially worrying that Uber’s business model appears to have been specifically designed, from the start, to reduce its tax liabilities.”
“I share many of the concerns that have been raised in the UK and elsewhere about Uber’s tax arrangements,” she said. “As a result, I have asked for the company to appear in front of the European Parliament’s ‘special committee’ which was set up to investigate corporate tax avoidance. I have also raised issues with their business model with the EU’s Competition Commissioner.”
Responding to Dodds’ accusations, a spokesperson for Uber told BI:
Our corporate tax structure is probably the least innovative thing about Uber: it’s the standard approach adopted by most multinational companies. Uber is a significant net contributor to hundreds of local economies, creating new economic opportunities for thousands of people in each city where we operate. In terms of corporation tax, this is a moot point today because unlike more mature, highly profitable US companies, Uber is still investing heavily
In terms of corporation tax, this is a moot point today because unlike more mature, highly profitable US companies, Uber is still investing heavily to roll out our service around the world.
Dodds has been a leading voice calling for European tax reforms to stop large corporations avoiding paying dues. Many of the recommendations made in a report she authored last year have been endorsed by the European Commission.
Dodds’ office clarified that Uber has not yet been asked to appear before the special committee on tax, and the EU Competition Commissioner has not yet responded to her letter about Uber.
Dodds continued: “Some people have suggested that criticising Uber’s business model is to criticise the new digital economy. This could not be further from the truth. There are huge numbers of digital companies out there which are creating value through increasing productivity and adopting innovative new business models.”
“Uber’s profitability, however, seems to be based on reducing its tax liabilities and screwing down pay for drivers. That is not the kind of ‘innovation’ which will help us create a sustainable digital economy for the future.”
Dutch VAT is 0% for entrepreneurs conducting foreign business from the Netherlands, compared to the UK’s 20% rate. While it is customers who pay VAT, not Uber, it means Uber can offer lower prices to the public. Critics say this gives it an unfair advantage over local minicab firms.
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