Starbucks will pay more UK tax by moving its HQ to London

The coffee chain says it wants to be closer to its caffeinated British customers. Margaret Hodge is still not impressed.

by Rachel Savage
Last Updated: 05 Feb 2015

Starbucks is shifting its European headquarters from Amsterdam to London, a move that feels suspiciously designed to make it look like a corporate cuddly bear that actually pays tax.

Kris Engskov, the coffee chain’s new president of Europe, the Middle East and Africa (that’s EMEA for all you acronym lovers), admitted to The Times that the company had found itself in an ‘uncomfortable spot’ when, along with Google and Amazon, it got a public roasting for its European tax arrangements last year.

However, Engskov argued that the main reason for the move was to get closer to Britain, which is Starbucks’ biggest and fastest-growing market in Europe (aka we’re all caffeinated up to our eyeballs). He also said that it would have a ‘relatively neutral’ impact on the company’s tax bill, from paying ‘more tax in the UK and...slightly less in the Netherlands’.

Starbucks, the world’s largest coffee chain, has only reported profit once since coming to the UK in 1998 despite selling £400m worth of hot drinks here in 2012. It paid a measly £8.6m corporation tax before enduring the wrath of politicians and the populace over its creative accounting.

The company then agreed to pay £20m tax in installments for 2013 and 2014 last June, having ‘listened’ to its customers. More ear-bending was clearly on the cards for the coffee seller though, as it appears to have caved in to the pressure.

Public accounts committee chairwoman Margaret Hodge, who grilled Starbucks over its tax, was pretty unmoved.

‘If they are going to start paying more tax then that is a good thing... I’m just sceptical of their motives,’ she told The Times. ‘What it demonstrates is the promiscuity of capitalism. Companies change their HQ at the drop of a hat.’ Some people are never satisfied.

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