Starbucks to move their European HQ to London

It was announced earlier on that Starbucks will be moving their European headquarters to the United Kingdom.

The global coffee giant currently has its European base in the Netherlands, but they will make the transition over to London in the coming months, claiming that they want to be closer to the UK.

Great Britain is Starbucks largest market in Europe, though the decision will invariably cast glances back to the recent scandal that engulfed the company when it transpired that they were utilising complicated arrangements in order to drastically reduce its tax bill.

According to the company’s annual report, published last year, the UK arm of the business paid a licensing fee to Starbucks in Holland and in conjunction they purchased their coffee from a Swiss division of the company at a premium price.

In the four years to the end of the 2012 reporting period, Starbucks said that it had lost more than £150m, whilst having a turnover that was touching £2bn.

Apparently, operations based in the UK repeatedly registered losses and as such, they paid very little in corporation taxes despite operating more than 700 coffee shops in England, Wales, Scotland and Northern Ireland.

Last year the coffee giant paid £5m in corporation tax. It soon transpired that it was their first payment of the tax since 2009 and they only operated as taxably profitable just once during their fifteen year stay in the UK – despite sales in the region of £400m in the twelve months preceding the announcement.

“The move speaks for itself,” said Kris Engskov, Starbucks’ president of Europe, the Middle East and Africa.

“London is the perfect place to grow our European business. In the UK alone, we plan to open over 100 retail stores.”

“This move will mean we pay more tax in the UK,” Engskov was also keen to stress.

It is worth to note that since 2009, the corporation tax rate in the UK has dropped to 21%, much closer to the figures required in the Netherlands.

In what will make interesting reading, Starbucks has to file its accounts for the fiscal year of 2012-13 by the end of June

photo: nayee* (Flickr) - used under Creative Commons