European MP accuses Uber of being 'designed, from the start, to reduce its tax'

A European member of parliament has accused Uber's European business of being "specifically designed, from the start, to reduce its tax liabilities."

Labour's Anneliese Dodds made the comment to Business Insider over email after we pointed out that two Dutch companies closely involved in running Uber's UK business had no employees for up to a year after it launched here. 

Uber employed eight people in its Amsterdam offices in 2013. But the corporate entity that immediately controlled the UK operation had none.

Uber strongly contests Dodds' characterisation of the business and argues that there is nothing wrong with the two companies in its Dutch structure that had no employees at the time. The company stresses that at the time eight employees worked for Uber overall in Amsterdam and it now employs over 150 people in the Netherlands. 

Uber runs all of its European operations from the Netherlands. The company has faced criticism for the set-up in the past and been accused of using the country as a tax haven, skirting corporation tax by processing revenue from Uber rides in places like London through its Dutch subsidiaries, where there is a lower tax rate.

Business Insider obtained documents from the Dutch Chamber of Commerce on Uber's Dutch businesses, which show Uber BV, the company that currently 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 Chamber has accounts on. 

Uber International Holding BV, the immediate controlling party of Uber's UK company, also had zero employees up to December 2013.

While these two had no direct employees, a Dutch business that owned them both has eight.

A spokesperson for Uber said: "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."

Uber declined to specifically say what the purpose of the two zero-employee Dutch businesses were, but said it was not unusual to have such structures to allow legal separation of subsidiaries, protect legal accountability, and allow varying ownership.

We've noted 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:

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 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."

Source : Business Insider 

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