Risk & Economy » Tax » Starbucks relocates European headquarters to UK

STARBUCKS is to move its European headquarters to London from the Netherlands by the end of 2014, the coffee house’s chief executive has confirmed.

The move to the UK would see it pay more tax in what the company described as its fastest-growing European market.

Following the relocation, Starbucks expects to open a further 100 shops, creating 1,000 new jobs. Senior executives, meanwhile, will transfer to its head office in Chiswick.

The past two years have seen the coffee house attract extensive criticism for its tax practices, after it emerges it had paid almost no tax in the UK over the decade between 2002 and 2012.

Between its arrival on British high streets in 1998 and 2012, it handed just £8.6m over to HM Revenue & Customs. The café minimised its tax liabilities by recording substantial losses in its UK accounts year after year.

However, following the opprobrium of the Public Accounts Committee, senior MPs, the public and the tabloids, it made the first £5m instalment of a £20m corporation tax bill in June last year.

However, while it is thought the relocation will increase the UK’s tax take from the business, it is not thought it will have any great effect on its global tax position.

Pinsent Masons tax partner Heather Self said: “The government has introduced a series of measures to make the UK more attractive to multinational companies like Starbucks. For example, dividends received and paid are exempt from tax and UK corporation tax has also just been reduced (in April) and will be cut again next year.

“If royalties continue to be paid to the EMEA holding company, these will become UK income rather than being taxed in the Netherlands. This will increase the UK tax payable, but may reduce the overall tax bill as the UK rate of 21% (20% from 2015) is lower than the Netherlands rate of 25%.”