Financial News

  • 17 April 2014, 7:29

Starbucks Moves EU HQ To London After Tax Row

Starbucks is to base its European headquarters in Britain, amid the ongoing row over multinationals' corporate tax structures.

The coffee company is to shift its base from Amsterdam to London before the end of 2014.

The UK is its largest European market, accounting for more than half its stores and employing around 7,500 staff.

Kris Engskov, the company's president for Europe, the Middle East and Africa (EMEA), announced the move on Wednesday and said "London is the perfect place to grow our European business".

Starbucks wants to move towards greater franchise participation, however at the moment it is not recruiting new UK franchisees.

A spokesman told Sky News: "As part of our drive to improve profitability in the UK, we are shifting our business model from an equity-focus towards more franchised and licenced stores.

"By bringing onboard local expertise, we are driving business success and it is a model we are now planning to pursue in other parts of Europe."

Mr Engskov was grilled by MPs in 2012, as the UK boss, as they investigated the rates of tax paid by global giants including Starbucks, Google and Amazon.

Starbucks has operated in Britain for more than 15 years but only made a small profit in one year, 2006.

In the four years to the end of its 2012 reporting period, the company said it lost more than 150m in Britain, despite having a turnover approaching 2bn.

Multinational corporations have come under fire for complex intra-company tax structures whereby the firm in one country pays itself in another for goods and services.

Starbucks' transfer pricing includes costs for licensing and royalties.

It also buys its coffee from a sub-division in Switzerland and then pays another to roast the beans in Amsterdam.

IT firms such as Apple, Twitter and Candy Crush owner King Digital use Dublin-based structures for European operations, while eBay bases itself in Luxembourg.

Amid the public furore stirred by the tax revelations, Starbucks said it would pay 'voluntary' UK corporation tax of 10m for two years.

However, critics slammed the payments as a gift and not a legal requirement.

Starbucks is due to file its latest UK accounts, for the 2012-13 fiscal year, with regulators before the end of June.