Starbucks’ Irish arm gains but avoids corporation tax

The Irish arm of coffee giant Starbucks brewed up impressive pre-tax profits of €745,707 in 2013 — but did not pay corporation tax.

Abridged accounts just filed by Ritea Ltd — formerly Starbucks Coffee Company (Ireland) Ltd — show that firm recorded a 3% increase in pre-tax profits from €721,327 to €745,707.

The firm enjoyed the increase in pre-tax profits in spite of gross profit going down by 17% from €2.49m to €2.06m in the 12 months to the end of September 2013.

The accounts for the Irish firm show the company’s operating profits decreased by 7% from €801,416 to €746,323 in 2013.

However, the company benefited from paying out interest payments of only €616, compared to €80,089 in 2012.

Weeks prior to the end of the 2012 financial year, Starbucks signed an agreement with Dublin-based Entertainment Enterprises Group, run by Colum and Ciaran Butler, for the group to licence Starbucks’ 17 stores in Ireland.

The Butler-run group had already been operating 10 Starbucks stores under licence to give the Dubliners licensing control of Starbucks’ Irish business.

The Starbucks’ operation has enjoyed major growth under the Butlers’ control with the number of Starbucks in the greater Dublin area now standing at 40 — the first Starbucks in Ireland opened at Dundrum Town centre in 2005.

The US-based giant’s decision to license out its business in Ireland followed the firm sustaining losses in 2010, 2009, 2008 and 2007.

Starbucks Coffee Company (Ireland) did pay corporation tax of €34,980 in 2011 in Ireland — its only corporation tax paid since 2005 and during that six-year period, the firm paid €5.7m in royalty and licensing fees to its parent company.

The Ritea Ltd 2013 accounts show that through the 12.5% corporate tax rate, it would have been liable to corporation tax of €93,213.

However, the accounts show unutilised tax losses of the same amount at €93,213 resulted in a zero tax bill.

The figures show the numbers employed by the firm in 2013 reduced from 211 to 160, with staff costs reducing from €4.6m to €3.9m.

The profit in 2013 helped to reduce the firm’s accumulated losses from €10.56m to €9.8m. The firm’s cash during the year reduced from €1m to €599,075.

© Irish Examiner Ltd. All rights reserved

Email Updates

Receive our lunchtime briefing straight to your inbox

More in this Section

White House hails ‘biggest tax cut’ in US history

The public sector will always be better off than the private sector

Oracle’s Irish unit in the red on higher costs

Glanbia wants ‘long Brexit transition’


Breaking Stories

Taoiseach insists US move will not force Ireland to change corporation tax rate

ECB cautious despite improvement in economic sentiment within eurozone

Ireland's 10 biggest companies paying 37% of total corporation tax

Consumer confidence higher outside Dublin, report finds

Lifestyle

Looking back in time with Dennis Dinneen's pictures

Four events to check out at the Cork International Choral Festival today

With bikini season beckoning please forget about quick fixes ...

Take a load off: Two people tell their individual weight loss journeys

More From The Irish Examiner