- Starbucks reserved $ 1.3 billion in profit at a Swiss branch over a decade, a new report said.
- The mass appeared to reduce Starbucks tax bill in other countries.
- It is the latest example of companies using tax shelter to avoid tax rates in the US and elsewhere.
A little -known Starbucks branch in Switzerland seems to have played a major role as the coffee chain paid during the last decade of taxes, according to a new report.
On paper, Starbucks Company Trading Company, or SCTC, centered on the Swiss Canton of Vaud, is responsible for helping the uninvolved coffee from places like Colombia and Rwanda before being used in the Starbucks cafes. It also oversees the coffee practice program and Starbucks farmers for ethical help of coffee.
According to a report issued Saturday by the Center for International Corporate Liability and Tax Research, or Cictar, there is also evidence that since 2015, the subsidiary has helped relocate about $ 1.3 billion in Starbucks profits away from other countries where they would have been subject to higher tax levels.
The chain is not at all the only large company that books benefit outside the United States, and the authors of the report found no evidence that the company was doing anything illegal. But Starbucks’ reputation to be aware of his role in society contradicts its use of tax gaps, said Jason Ward, a leading analyst in Australia -based Cictar. The group is funded by unions as well as beliefs and foundations.
“Starbucks is different in what really makes a bank in his social responsibility image,” Ward Business Insider told.
Starbucks use Switzerland -based SCTC to book the cost of unforgettable coffee beans, although the beans do not seem to move around Switzerland, according to the report.
SCTC “then sells exactly the same coffee beans at a higher price for other entities in the Starbucks corporate structure,” the report said. This note was about 3% between 2005 and 2010, then increased to 18% between 2011 and 2014, says the Cictar report.
Cictar could not find “any significant changes in business practices or basic costs” that would justify the profit jumping, the report said.
“It’s not like they are baking coffee or researching different types of beans or anything else,” Ward said. “There is nothing that is happening there.”
In Switzerland, profits from those markings are taxed to “a significantly lower tax rate” than if they were booked in the United States or other countries, according to the report.
While the exact level of taxes paid by Starbucks in Switzerland is not publicly recognized, US companies pay an average rate of 3.9% in the country, according to an IRS data analysis by the Institute for Taxation and Economic Policy, or ITEP. US corporate tax rate is 21%.
Recently, between 2015 and 2021, SCTC has paid between $ 125 and $ 150 million each year for another Starbucks, Starbucks Cafe BV -based branch, according to the report. These payments do not seem to be taxed either after leaving Switzerland, nor after entering the Netherlands.
The report looked at financial records for Starbucks affiliates around Europe to track the profits reserved at SCTC.
In a response Cictar included on page 4 of the report, a Starbucks spokesman said the reports of the report “fail to accurately reflect our business model and how different parts of our business contribute to the success of the company”.
“Starbucks pays appropriate and accurate tax levels in all jurisdictions in which he operates and works proactive with tax authorities to inform them of his business model and related tax implications,” the spokesman said.
A Starbucks spokesman told BI that the company “is in full compliance with tax laws around the world” and had an effective global tax rate of about 24% last year. SCTC provides ”High quality coffee to meet our global demand “and includes the support centers of farmers in the growing areas of the world.
“Switzerland has been a global coffee trading center for decades and SCTC is located there to help us use the best talent of coffee trading in the world,” the spokesman said.
Starbucks is not the only company that looks abroad to minimize its tax liabilities. A 2021 report by Cictar looked at the use of Uber shells in the Netherlands to limit his tax bill, for example.
Large companies and wealthy individuals maintain money in a variety of tax-sheltered countries, such as the Kayman Islands, as they charge less in taxes than their birth countries-nor at all.
Cictar’s findings for Starbucks are not surprising, said Matthew Gardner, old associate at ITEP.
“This is one thing that every company or any industry, company in every industry that has a lot of intangible assets are doing now,” he told BI.
Companies that store profits in tax housing – and US government responses to strategy – go behind decades, he said.
A 2004 tax holiday, for example, allowed corporations to bring profits to the United States from abroad at a highly reduced tax rate. The 2017 tax and job reduction act, adopted during President Donald Trump’s first term, also contained provisions to return more corporate profits in the United States.
But many companies have continued to use offshore tax paradise, Gardner said. An ITEP analysis of IRS data from 2020 revealed that US -owned companies reported $ 390 billion in profits in 15 possible tax shelters, including the Kayman, Ireland and Switzerland.
Avoiding large enterprise taxes ultimately increases the tax burden on other taxpayers, including individuals and small businesses, Gardner said. He can also make governments reduce spending and shorten programs, he said.
“Any way in which the loss of income from these offshore profits can be paid for damages the rest,” he said.
Do you have one advice? Contact this reporter via email at abitter@businsinsider.com or signal at 808-854-4501. Use a personal email address and non -working device; Here is our guide to sharing information safely.