Starbucks pays €5.7m in royalties but only €35k in Irish taxes since 2005

Coffee-shop chain Starbucks has only paid €35,000 in taxes in Ireland since 2005, while paying €5.7m in royalty and licensing fees to its parent company, accounts filed by the US coffee chain’s wholly-owned Irish subsidiary Ritea Ltd show.

Accounts filed by Ritea — owned by Dutch-based Starbucks Coffee Emea — record a loss every year it has been in operation in Ireland except for 2011, when the company recorded a €524,944 profit on which €34,980 in tax was paid.

However, over the same period, the company paid millions in royalties and licensing fees.

In 2008, when Ritea reported a loss of €5.5m mainly due to a €4m write down on assets, the firm still managed to pay €1.3m in royalties.

The Irish accounts bear similarity to practices uncovered in a four-month probe by news agency Reuters that discovered how Starbucks was able to cut income tax by paying fees to other parts of its global business, such as royalty payments for use of the brand. This means Starbucks UK is effectively making a loss and therefore does not have to pay any corporation tax.

The 2011 tax paid in Ireland is in contrast to the chain’s UK operations where the company has paid no tax at all in the last three years. In its 14 years of operation in the UK, the chain which introduced the phrases, venti, grande, and tall to the english lexicon, paid just £8.6m (€10.6m).

Despite reporting losses the UK branch of the coffee chain has been boasting about its profitability for 12 years in investor and analyst phone calls.

Starbucks officials often talked about the “profitable” UK business, and even cited it as an example to follow for operations back home in the US.

The Seattle-based group, with a market capitalisation of $40bn (€30.6bn), is the second-largest restaurant or cafe chain globally after McDonald’s.

The paper losses show how multinationals the world over use perfectly legal tactics to minimise tax leakage in the different regions where they operate.


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