Starbucks in EMEA -Tax Q&A
Q. Is Starbucks paying tax in the UK and Europe?
Yes. Starbucks UK delivered its third straight year of profit in 2016 and paid £6.7 million in tax.
Since Starbucks moved its Europe, Middle East and Africa headquarters to London in October 2014, profits from licensees running Starbucks across 38 countries, reaching from Norway to Morocco, Portugal to Russia, are now earned in the UK.
During its first full year of UK operations, Starbucks EMEA made an operating profit of $24 million and paid UK Corporation Tax of $15 million. This is in addition to the UK Corporation Tax paid by Starbucks UK for the same period.
Starbucks pays an average global effective tax rate of roughly 33 percent, well above the 18.5 percent average rate paid by other large US companies.
Q. Is Starbucks using tax havens to avoid paying taxin the UK and Europe?
No. The company’s UK and EMEA businesses are headquartered in London. This means that all profits generated by those businesses are taxed according to UK law and taxes are paid to HMRC.
Q. Why did Starbucks relocate its EMEA headquarters to London? Does it still have a presence in Amsterdam?
In June 2014, Starbucks announced that we would move our regional headquarters for Europe, Middle East and Africa (“EMEA”) from Amsterdam to London. This move was completed in October that year. We made this decision because the UK is the biggest market in the region and re-locating our regional headquarters in this market makes it easier for us to implement our growth strategy.
New jobs have been created in the UK as a result of the move of the EMEA headquarters and, with greater access to the diverse talent and thinking in one of the world’s most competitive coffee markets, Starbucks is better able to deliver growth across the whole of the EMEA.
Starbucks continues to maintain its presence in Amsterdam with our coffee roastery and distribution centre for the whole of Europe. This was the case before the relocation of the headquarters and has not changed. The Support Center in Amsterdam also remains, which provides HR, logistics and finance support to the EMEA region and employs over 100 partners.
Q. What is the latest development with the European Commission’s state aid case against Starbucks and the Netherlands?
Starbucks shares the concerns expressed by the Netherlands government that there are significant errors in the decision, and we are appealing since we followed the Dutch and OECD rules available to anyone.
The dispute between the European Commission and the Netherlands as to which OECD rules we and others should follow could require us to pay about €25 million on top of the $3.8 billion in global taxes we have paid over the seven years in question.
Starbucks complies with all OECD rules, guidelines and laws and supports its tax reform process. Starbucks has paid an average global effective tax rate of roughly 33 percent, well above the 18.5 percent average rate paid by other large US companies.