The Chinese online marketplace Temu’s EU operations more than doubled pre-tax profits last year to just below $120m (£90m) despite employing just eight people, accounts show.
They rose 171% in the 12 months to December 2024 compared with the $44.1m the year before, as shoppers snapped up its low-cost goods, which are widely promoted on social media.
However, the company paid just $18m in corporation tax, almost $3m of which was a mandatory top-up tax brought in at the end of 2023 after the EU signed up to a global minimum tax rate for large companies.
The accounts filed for the group’s Ireland-based EU parent group, Whaleco Technology, also show revenues rose to $1.7bn, compared with $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 – equivalent to more than a quarter of the population.
The figures emerged after separate accounts showed almost doubling profits and revenues at the online marketplace’s UK operations.
The rise in sales comes before moves by the EU to close a loophole that allows packages worth less than €150 (£130) to avoid customs duty and some border checks.
Last year, 4.6bn low-value parcels entered the EU, equivalent to 12m a day, three times more than in 2022. More than 91% of parcels valued at less than €150 came from China, where Temu and its fellow low-cost seller Shein make and dispatch most of their goods.
However, controls began to be tightened in July this year, and customs duty is expected to be applied from 2028.
The US this summer abolished its “de minimis” exemption, which allowed goods worth less than $800 to skip import duty, to limit the rise of Temu and Shein, while the UK chancellor has said she is reviewing a similar loophole.
Paul Monaghan, the chief executive of the Fair Tax Foundation, estimates that Temu’s Irish entity facilitated consumer sales of $10bn in the EU – as its revenue figure only accounts for the company’s commission and fees from independent sellers on its marketplace.
If Temu’s estimated $2bn in sales via its sellers are included in the UK, that would make the marketplace bigger than the UK retailer Next and about 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 enormous sales,” Monaghan said.
“What we have here is a chain of companies in a series of tax havens, that have been structured so as to leave little or no tax benefit in Europe.
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“The UK and other European governments need to move much more quickly to not only protect their tax base, but allow existing retailers to compete on a level playing field with these Chinese e-commerce giants that have overseas tax avoidance hard-wired into their structures.
“Standing strong on the global minimum tax and digital services tax, reviewing customs duty exemptions and bolstering requirements for multinationals to publish a country-by-country breakdown of the taxes they pay would be a great place for politicians to start.”
A spokesperson for Temu said its operations in Ireland were “real operating companies employing real people” and the employee numbers did not reflect the full scale of its operation presence.
“Temu categorically rejects any suggestion that our structure or operations are designed to avoid taxes or minimise our economic footprint in Europe. Despite being a young and fast-growing company still in the investment phase, we have already paid billions of euros in taxes across European jurisdictions, and that figure will continue to rise as our operations mature.
“The tax figure cited refers only to 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, passing those efficiencies back to consumers in the form of lower prices on quality goods. At the same time, we have been creating new growth opportunities for local sellers across Europe.
“Our focus is on the long term: building a sustainable, compliant, and trusted platform that helps consumers access quality products at affordable prices while enabling local sellers across Europe to grow their businesses and reach new markets.”
