It was only last year that co-working space aggregator WeWork's losses were deepening, mostly thanks to an "intercompany expense" of around $3.4 million. The amount shows how the company uses transfer pricing to send some of its profits across the globe.
Lodged for the first time in the Australian market, the financial statements also reveal how the global co-working giant has racked up more than $250 million in lease commitments as it accelerates its roll-out through the Australian market.
Those commitments represent the grand tally of all the rent it has agreed to pay across its Australian portfolio over the next decade or so.
At the same time, the results register the surge in custom filling WeWork desks since its launch in late 2016 in Sydney. Membership and service revenue rose to $22.9 million over the 2017 calendar year, up from $1.4 million in its truncated 2016 year.
But WeWork's expenses rose faster, taking it deeper into the red, with a $2.9 million loss recorded in 2017 compared to a $2.6 million loss in the previous year.
Among those items was an "intercompany expense" of almost $3.4 million, up from zero the previous year, also described as a "management expense fee" paid to a related party.
"Related party management fees are typically charged by multinational companies to share global management costs," PwC's tax partner Ellen Thomas stated.
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