* Move follows widespread criticism over low tax
* The UK is a great place to do business, says Starbucks
* Plans 100 new UK stores after relocation this year
(Writes through, adds comment from EMEA boss)
By Tom Bergin
LONDON, April 16 Starbucks Corp will
move its European headquarters to London from the Netherlands
this year and pay more tax in the UK as a result, the company
said on Wednesday.
The shift by the world's largest coffee chain comes after
its low tax contributions in Britain provoked widespread
criticism, including Prime Minister David Cameron telling a
meeting in Davos that companies that avoided paying tax needed
to "wake up and smell the coffee".
Starbucks was called to testify before a parliamentary
hearing about its tax affairs after Reuters reported in 2012
that the company had told the UK tax authority its British arm
was a loss-making business while informing investors that the
subsidiary was profitable.
The company revealed at the hearing that it had agreed a
deal with Dutch tax authorities allowing it to pay "a very low
tax rate" there. This agreement meant the group was able to
reduce its tax liability by having its European subsidiaries pay
large royalties to the Dutch unit for using the Starbucks brand.
That system - slammed by UK lawmakers in a report in 2012
-will now be abandoned and the European businesses will pay fees
to a British subsidiary, the group's Europe, Middle East and
Africa boss said.
"This means we will pay more tax in the UK," Kris Engskov
said in a telephone interview.
Engskov said the criticism the company faced had not, as
some business leaders claimed, made Britain a less attractive
place to invest.
"The UK is a great place to do business," he said.
Heather Self, partner at law firm Pinsent Masons, said the
move to London followed a change in UK tax rules aimed at
encouraging international companies to locate their headquarters
in Britain, whereby UK-registered companies are no longer taxed
on income earned outside the country.
A Starbucks spokeswoman said the rule change had no impact
on the company's decision.
Starbucks also said it would open 100 new stores in the UK,
creating 1,000 new jobs, after the relocation this year.
Senior executives will transfer to Starbucks' head office in
Chiswick, west London, though manufacturing jobs will remain in
Engskov insisted that Starbucks retained the support of
customers in spite of politicians' calls for boycotts and a
preference among many coffee afficionados for trendy,
"We are as relevant as ever," he said.
(Additional reporting by Sampad Patnaik in Bangalore and Jack
Stubbs in London; Editing by Tom Pfeiffer and David Goodman)