Starbucks to move Europe base to London, pay more UK tax

LONDON Wed Apr 16, 2014 7:10am EDT

The sign outside a Starbucks coffee shop on in Westminster is seen with the London Eye in the background, in central London, December 3, 2011. REUTERS/Olivia Harris

The sign outside a Starbucks coffee shop on in Westminster is seen with the London Eye in the background, in central London, December 3, 2011.

Credit: Reuters/Olivia Harris

LONDON (Reuters) - Starbucks Corp (SBUX.O) said on Wednesday it would move its European headquarters to London from the Netherlands and pay more tax in the UK as a result.

The world's largest coffee chain has endured widespread criticism over low tax contributions in Britain, since Reuters reported in 2012 that the company had told the UK tax authority it was lossmaking while informing investors that the British subsidiary was profitable.

Following the Reuters report, Starbucks was called to testify before a parliamentary hearing about its tax affairs, where it revealed it had agreed a deal with the Dutch tax authorities that allowed it pay "a very low tax rate" there.

"This move will mean we pay more tax in the UK," the company said in a statement, without giving further details.

Starbucks regional president Kris Engskov said London was "the perfect place to grow our European business".

The move follows a change in UK tax rules aimed at encouraging international companies to locate their headquarters in Britain, whereby UK-registered companies are not taxed on income earned outside the country.

A Starbucks spokeswoman said the tax rule change had no impact on the company's decision.

Starbucks said it would open 100 new stores in the UK, creating 1,000 new jobs, after the relocation later this year.

Senior executives will transfer to Starbucks' head office in Chiswick, west London, although manufacturing jobs will remain in the Netherlands.

A panel of lawmakers called upon the government last year to conduct a review of Britain's corporate income tax regime to tackle what it said was a "serious problem of avoidance.

(Reporting by Sampad Patnaik in Bangalore and Jack Stubbs and Tom Bergin in London; editing by Tom Pfeiffer)

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