Netflix snubs 'Tech City' for Luxembourg
In another blow to star of the Coalition's "digital economy" strategy, Netflix has decided to base its European HQ in Luxembourg, not "TechCity". Although Netflix is using the UK to spearhead its UK expansion - launching its video-on-demand streaming service here first next year - it will instead be “joining the many internet companies that have found it a great place to do business" in Luxembourg, CFO David Wells said on Monday.
Internet companies including Amazon, PayPal, Skype, eBay and Spotify have all put their HQs down in the Grand Duchy. It's proof that low taxes and minimal red tape matter the most, when location decisions are made.
"TechCity" is one of No 10's pet initiative; it's the personal flagship of senior policy advisor Rohan Silva and carries the blessing of PM David Cameron.
The problem for No 10 is that instead of promoting traditional Tory values of wealth creation and risk-taking, "TechCity" has become synonymous with 'nontrepreneurs' and poseurs, attempting to start what serious investors now refer to as "leisure startups". Founders of real startups don't have time to go to "meetups" all day, let alone Tweet. It's more about living a lifestyle than doing work.
Meanwhile British science and technology innovation thrives - but not in Shoreditch - while "TechCity" is becoming an emblem of how out-of-touch policy wonks can be - and what a strange, virtual world they live in.
The magazine PC Pro recently found that only a fraction of the much-vaunted "600 new tech firms" in TechCity are actually new, and very few are tech firms.
So contrast the media2.0sluts and nontrepreneurs who talk up the scene with NetFlix itself. This is a real profit-making, publicly-quoted company with 20 million real paying customers. Revenues in the nine months to 30 September were $2.32bn with a gross profit of $864bn from making copyright material attractive. It achieved this without asking for the rules to be bent.
Luxembourg was once the perennial joke in Jeux Sans Frontiers, now it's the Luxembourgers turn to laugh at us... ®
"Revenues in the nine months to 30 September were $2.32bn with a gross profit of $864bn from making copyright material attractive. It achieved this without asking for the rules to be bent."
I'm sure that making $864bn profit from $2.32bn revenues is breaking the basic rules of accounting (or mathematics).
That'll be a brass nameplate and a couple of beancounters to write invoices to each other, then.
The rules are different for products delivered electronically vs products delivered by courier.
If you buy a fondleslab from apple.com and you pay 20% UK VAT. If you then go to the iTunes store to buy some things to put on it, you pay 15% Luxembourg VAT.