Starbucks moving European headquarters to London
Starbucks, which has suffered withering criticism in Britain for avoiding taxes, said it would move its regional headquarters to London from Amsterdam and pay more to the British Treasury.
The New York Times
PARIS — Starbucks, which has suffered withering criticism in Britain for avoiding taxes, said Wednesday that it would move its regional headquarters to London from Amsterdam and pay more to the British Treasury.
The company has been trying to make amends by paying 5 million pounds ($8.4 million) in taxes last year, after paying no corporate taxes since 2009 in Britain, where it has hundreds of stores. But the company noted Wednesday that moving senior executives from the Netherlands to London by the end of the year would put them at the heart of what is its biggest and fastest-growing market in Europe.
Also, the company said in a statement, “This move will mean we pay more tax in the U.K.” It didn’t say by how much.
The coffee chain is among a list of multinationals like Apple, Google, Amazon and Facebook that have been criticized for paying little or no taxes on billions of dollars of profits by using creative accounting and exploiting national differences across Europe in corporate tax rates.
At parliamentary hearings on tax avoidance in Britain in 2012, executives of Google, Amazon and Starbucks maintained that their tax policies were perfectly legal because EU law lets companies based in one member state operate across the 28-country bloc.
Around that time, Starbucks said it was reviewing its British tax practices after disclosing that it had paid no corporate tax in Britain in 2011 despite generating sales of 398 million pounds ($668 million).
Concerns that corporations were gaming the system have prompted Algirdas Semeta, the EU tax commissioner, to urge measures to keep companies from exploiting the tax-rate variations among the countries. It also led Prime Minister David Cameron of Britain to promise action. One Labour member of Parliament, Margaret Hodge, called for boycotts of Amazon, Google and Starbucks for what she described as their “immoral” behavior.
Starbucks became the target of criticism in Britain after an investigation by Reuters in 2012 showed it had been reporting losses on its British operations to the tax authorities even as it told investors it was profitable.
The Seattle-based company used common strategies to keep its tax bill down, the Reuters investigation showed, by charging licensing fees to its British operations, by assigning profits to subsidiaries in other countries, and through intercompany loans that allowed it to shift profits to low-cost jurisdictions.
Starbucks reported record worldwide sales for fiscal 2013 of $14.9 billion and net profit of $1.7 billion. The Europe-Middle-East-Africa region accounts for 7.8 percent of Starbucks’s global sales, but only 2.6 percent of its global operating income, according to its annual report.
The company’s 800 U.K. stores represent more than half of its European locations and employ 7,500 people. This year Starbucks plans to add 100 more stores and 1,000 workers in Britain, the company said in a statement.
The executives from Amsterdam will move to the company’s office in the Chiswick area of London, and some roasting and shipping functions will remain in the Netherlands, said David Henderson, a spokesman for Starbucks. He said Kris Engskov, who is now the company’s top executive for Europe, the Middle East and Africa, was not available for an interview.
Despite the move to London, Starbucks does not expect much difference in its overall tax bill, Engskov told The Times of London, which first reported the headquarters relocation.
“Over time we will pay more tax in the U.K. and pay slightly less in the Netherlands,” he told the newspaper. “On a global level I think it’s relatively neutral. Our global rate is 34 percent, and we don’t expect it to have a significant impact on that.”