Wonga Swiss Wangle
Company moving money through a tax haven
Payday lender Wonga has recently moved key parts of its business to Switzerland - a well known tax haven - potentially saving the company millions in UK tax.
According to new research from Corporate Watch, Wonga registered software and brand names with WDFC SA - a Swiss subsidiary.
Corporate Watch explained "that when someone applies for a loan in the UK, their details would be processed by the Swiss company's software, which would then charge Wonga's UK companies for its use, as well as the right to use the Wonga brand". This type of tax avoidance strategy enables the company to reduce its UK profits while increasing WDFC SA's revenue which would be taxed at a lower rate.
Switzerland overseas business tax rate was between 9-11%. However in some instances deals had been struck with the government to allow companies to be charged as little as 1% tax on their revenue.
The subsidiary had only been registered since July 2012 but, through Companies House filings, Corporate Watch found that Wonga had sent £35 million of its revenue to Switzerland.
According to records from the UK’s Intellectual Property Office and the EU's trademark office, WDFC SA had acquired the trademark to the Wonga brand name and computer software used to assess customers' loan applications.
The company had previously been granted a consumer credit licence by the UK's Office of Fair Trading in May 2012, enabling it to act in "credit brokerage", "debt administration" and "debt collecting" and giving it the authority to deal with people's data.
WDFC SA's Articles of Association lodged with the Geneva company registry described its main purpose was approving loans made by Wonga’s subsidiaries outside Switzerland - which included subsidiaries in South Africa, Canada, Poland and the US. The records also showed Chief Operating Officer Niall Wass and two other executives were now based in Geneva.
Wonga told Corporate Watch that there “was no attempt or intention to reduce our UK corporation tax liability through these, or any other inter-company transactions”.
Corporate Watch also found that the company had registered a new software patent in Ireland, another country with a much lower corporation tax rate than the UK.
This story has been added to our corporate database. The database powers all our live product guides, giving the score for each company on our rankings tables. Find out more about how we rate companies.
Find out more about our tax justice campaign including our boycott of Amazon.
Register on the site to receive our free monthly email newsletter and keep up-to-date with all our research and campaigning.
Ethical Consumer on Google+