Netflix saw its highest profits ever in 2018, but all around the internet you'll see claims that the streaming giant didn’t pay any taxes that same year.
Headlines like “Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Taxes,” and “Netflix Paid Zero in Taxes on Record $845M Profits in 2018,” make serious claims.
So are they true?
Did Netflix pay “zero in taxes” in 2018 as many headlines have claimed?
No, the claims aren’t accurate. Netflix paid more than $130 million in taxes in 2018, which was roughly 15 percent of their income.
That money was spent on “foreign” taxes and since the U.S. gives credits on international taxes, Netflix actually had credits in U.S. federal and state taxes.
Put simply, Netflix paid more than $130 million in taxes, but they weren’t to the U.S. government.
WHAT WE FOUND:
First off, the part of the headlines claiming Netflix had record profits in 2018 are accurate.
Netflix's form 10-K, filed with the SEC, shows that Netflix had $845,402,000 in profits in 2018.
The same form shows $381,056,000 in foreign revenue for a total of more than $1.2 billion.
Additionally, it shows Netflix’s taxes. In both the “Federal” and “State” categories, Netflix received a tax credit. That’s money they can use to pay future taxes.
Below those numbers, the form lists $133,146,000 spent in “foreign” taxes.
Using form 10-K we can verify that claims that Netflix spent no money on taxes are FALSE.
If those claims had instead said Netflix spent zero in U.S. or State taxes, they would be correct.
That report filed to the government shows Netflix paid more than $50 million in U.S taxes in 2016 and 17.
So how did they manage to make $845 million dollars in profits – and not pay taxes in the United States?
Companies can get tax credits for money that’s taxed overseas.
But outside of these SEC and shareholder documents – Netflix doesn’t have to publicly report how they did it.
So we may never know.
When asked to comment on these claims, a Netflix spokesperson sent the following statement:
"it is inaccurate to say that we paid zero taxes in 2018. Our financial statements show that we paid $131 million in cash taxes in 2018."