China’s Temu more than doubles EU profits to nearly $120m despite having only eight staff | Retail industry

Chinese online marketplace Temu’s EU operations more than doubled pre-tax profits to just under $120 million (£90 million) last year despite employing just eight people, accounts show.

It rose 171% in the 12 months to December 2024, compared to $44.1 million a year earlier, as shoppers bought low-cost items widely promoted on social media.

But the company paid only $18 million in corporate taxes; almost $3 million of this was a mandatory additional tax introduced at the end of 2023 after the EU signed up to a global minimum tax rate for large companies.

Accounts filed for the group’s Ireland-based EU parent Whaleco Technology show revenues rose to $1.7bn, compared to $758m the previous year, before new controls on the super-budget retailer.

Separate documents show Temu now has more than 115 million customers across the EU; This corresponds to more than a quarter of the population.

The figures were revealed after separate accounts showed the online market had almost doubled profits and revenues at its UK operations.

The surge in sales comes ahead of the EU’s move to close a loophole that allows packages worth less than €150 (£130) to avoid customs duty and some border checks.

Last year, 4.6 billion low-value parcels entered the EU; This means 12 million parcels per day; This is three times more than in 2022. More than 91% of parcels worth less than €150 came from China, where Temu and its low-cost seller Shein manufacture and ship most of their goods.

However, controls have started to be tightened since July this year and the customs duty is expected to be implemented from 2028.

While the U.S. this summer scrapped the “de minimis” exemption that allowed goods worth less than $800 to be exempt from import duty to limit the rise of Temu and Shein, the U.K. Prime Minister said he was considering a similar loophole.

Paul Monaghan, chief executive of the Fair Tax Foundation, estimates that Temu’s Irish start-up has facilitated $10 billion in consumer sales in the EU; because the revenue figure only takes into account the company’s commission and fees from independent sellers on the marketplace.

If Temu’s estimated $2 billion in sales through its resellers are included in the UK, this would make the marketplace larger than UK retailer Next and around the same size as Primark.

“Serious questions need to be asked as to why Temu has such a negligible economic and tax footprint in the UK and across Europe despite its massive sales,” Monaghan said.

“Here in Europe we are faced with a chain of companies in a series of tax havens that are structured in a way that leaves little or no tax advantage.

“The UK and other European governments need to move much faster not only to protect their tax bases, but also to allow existing retailers to compete on equal terms with Chinese e-commerce giants who have integrated offshore tax avoidance into their structures.

“Standing strong on the global minimum tax and digital services tax, reviewing tariff exemptions, and supporting requirements for multinational companies to publish a country-by-country breakdown of the taxes they pay would be a great starting point for politicians.”

A spokesman for Temu said its operations in Ireland were “genuine operating companies employing real people” and that employee numbers did not reflect the full operational presence.

“Temu categorically rejects any suggestion that our structure or operations are designed to avoid taxes or minimize our economic footprint in Europe. Although we are a young and fast-growing company still in the investment phase, we have paid billions of euros in taxes in European jurisdictions and this figure will continue to increase as our operations mature.

“The tax figure specified only represents the tax paid by a single legal entity and does not include customs duties, VAT and other taxes.

“Temu entered the European market just two years ago and has invested heavily in building its platform to connect sellers and consumers more efficiently and pass this efficiency back to consumers in the form of lower prices on quality goods. At the same time, we are creating new growth opportunities for local sellers across Europe.

“Our focus is long-term: creating a sustainable, compliant and reliable platform that helps consumers access quality products at affordable prices, while also allowing local sellers in Europe to grow their business and reach new markets.”