U.S. coffee giant Starbucks is moving its European headquarters from the Netherlands to the United Kingdom at the end of this year. Where the company sees a plan to focus on its largest and fastest-growing regional market, others, led by consumer analysts, see a strategy to clean up its image as a tax-evader – and consequently gain greater presence in Europe (A Parliamentary committee accused the U.S. chain of moving profits generated in the U.K. offshore to dodge taxes, which led to a costumer boycott).
Why hasn’t it made such a move before? Because Starbucks hadn’t paid corporate taxes in five years, beginning in 2008; in June 2013 – in a very public move – they handed over £5m ($8.4 million) to HM Revenue and Customs (the U.K.’s customs and tax department). The company said that with the move they will have to pay more taxes to the British Treasury.
Several members of British Parliament believe that what played an important role in the Starbucks’ move are some of the U.K.’s recently adopted economic policies. George Osborne, Chancellor of the Exchequer, has pushed a series of controversial tax reforms to woo international firms, including cutting corporation tax from 28% in 2010 to 20% by 2015 (it’s currently at 24%). Not only that but U.K.-registered companies are no longer taxed on income earned outside the country, so Starbucks needs not to worry about that. Even if a company’s spokeswoman said the rule change had no impact on the company’s decision, the Seattle-based company clearly has faith in the Tories’ economic strategy.
Osborne recently also said praised over economic victories: wage rises stood at 1.7% for the year to February, compared to the official inflation figure of 1.6% the Office for National Statistics also said that number of people with a job has reached 30.4 million, the highest since records began, after the biggest increase in employment for 25 years. Starbucks also said it would open 100 new stores in the U.K., which would create 1,000 new jobs, after the relocation.
Even though Starbucks and the U.K. government are getting along much better than before, a crackdown against large corporations that exploit tax loopholes must remain in place. The decision to chase and denounce companies that develop these practices was one of the main outcomes of 2013’s G-20 meeting.
In the coffee giant’s case, with more than 2,000 stories in 35 countries, there is still much to be scrutinized. Cameron said last year that companies “need to wake up and smell the coffee, because the public who buy from them have had enough.” Moving headquarters is a step forward in Starbucks’ example yet the public is still tired of the tax-avoidance schemes still largely in place.