Palantir is having a remarkable week. Its shares jumped almost 30% on Tuesday. Chief executive Alex Karp forecast revenue nearly doubling to $8bn this year, and called demand “otherworldly”. In the same week, a report found it pays almost nothing in tax outside the United States.

The numbers are sharpest in Britain, Palantir’s biggest market outside America. It holds about £670m in UK government contracts and declared £247m of UK revenue for 2024. Yet it paid just £2m in UK corporation tax that year, the Guardian reported. The study behind the figures put Palantir’s global effective rate at 1.4%.

How the margin vanishes

The report, by the Centre for International Corporate Tax Accountability and Research, describes a pattern of profit-shifting. In the US last year Palantir kept 47.7 cents of profit on every dollar of revenue, Politico reported. Outside the US the margin was 6.3%, and in some European subsidiaries about 3%. The report says almost all the pre-tax profit flows to the American parent.

The mechanics are ordinary enough. Palantir books only 4% of revenue abroad, even though a quarter comes from non-US customers. Its US companies sign the contracts. In Sweden, the firm reported €13.7m of revenue but €1.1m of profit, and a tax bill of €424,000. Paying staff in shares rather than cash lowers the corporate bill further, and shifts the burden onto employees.

Palantir’s answer

Palantir rejects the framing. It says it complies with tax rules everywhere it operates. Its tax, it argues, “reflects the level of economic activity” in each country. Transfer pricing, a spokesperson said, is “entirely standard practice” for large multinationals. The company also paid $148m in UK employment taxes last year, it noted. The report makes no claim that any of this is illegal.

It also argues the share scheme raises more tax overall, not less. Employees, it says, pay income tax at rates above the 25% corporation rate. That defence has limits. In the US, Palantir has banked huge tax credits and past losses. At its current profit it would owe no federal income tax for nearly a decade, the report says.

The politics of a public contract

What gives the report its charge is where Palantir’s money comes from: the public purse. Unison commissioned the study. Its Andrea Egan warned that firms “shouldn’t be free to pay what they please,” and that ministers should not hand public-service contracts to companies “starving them of cash,” she argued. The row adds to wider scrutiny of Palantir’s NHS work.

Across Europe the mood has already turned. Germany’s military rejected the company, and France is dropping it for a homegrown rival. Palantir is not the only US tech giant to route profits this way. Apple, Amazon and Microsoft have all fought Europe over tax. But the timing stings: a firm minting billions, paying £2m where it holds £670m of Britain’s contracts.

Get the TNW newsletter

Get the most important tech news in your inbox each week.