"But its British subsidiary, at first glance, appears to be doing less
well. Last week, it announced its first ever profits in Britain—of just
£1m ($1.54m)—in spite of having first set up in the country in 1998 and
now having 791 outlets. Analysts say that seems odd in a country that
has been crazy about caffeinated beverages since the 17th century and
now spends £1.45 billion in coffee shops each year, according to Mintel,
a market-research firm.

The main reason why S*******s has run persistent losses is not due to a
lack of interest in its coffee, but to minimise its tax bill. In fact,
S*******s’ operating profits are only slightly less in Britain than
America. In 2012, it made £70m on £414m of sales of frappuccinos,
espresso coffees and the like. However, it also made administrative
losses and royalty payments totalling £98m, enabling the division to
declare a £30m loss. It is via these payments that the firm has been
able to transfer its British profits to its Dutch subsidiary, which is
charged lower rates of tax."

No comment
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It could be any one of our favourite international companies.

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Regards
     Stephen

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> The main reason why S*******s has run persistent losses is not due to a
> lack of interest in its coffee, but to minimise its tax bill. In fact,
> S*******s’ operating profits are only slightly less in Britain than
> America. In 2012, it made £70m on £414m of sales of frappuccinos,
> espresso coffees and the like. However, it also made administrative
> losses and royalty payments totalling £98m, enabling the division to
> declare a £30m loss. It is via these payments that the firm has been
> able to transfer its British profits to its Dutch subsidiary, which is
> charged lower rates of tax."
>
> No comment

The companies are just doing whatever they can to make money (which is 
what the shareholders want them to do), don't blame them. If you want to 
blame someone blame the goverment for not introducing new laws to 
prevent this type of thing.

It's also unfair of the media to pick out well-known brands that people 
know, what about all the other multi-national companies that you haven't 
heard of?

And don't forget in your example above the UK government will get far 
more in VAT than the Dutch government will get in tax, so far from all 
is not lost.

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On 17/02/2015 10:46, scott wrote:
> And don't forget in your example above the UK government will get far
> more in VAT than the Dutch government will get in tax,

Sorry, could you explain the significance of that?

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Regards
     Stephen

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>> And don't forget in your example above the UK government will get far
>> more in VAT than the Dutch government will get in tax,
>
> Sorry, could you explain the significance of that?

That the UK government don't get "nothing" from Starbucks because they 
transferred all their profit abroad.

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On 17/02/2015 11:57, scott wrote:
>>> And don't forget in your example above the UK government will get far
>>> more in VAT than the Dutch government will get in tax,
>>
>> Sorry, could you explain the significance of that?
>
> That the UK government don't get "nothing" from Starbucks because they
> transferred all their profit abroad.
>

I would say that they do get nothing.
Star***ks only collect the VAT they get from their customers and pass it 
on to HMRC. VAT has nothing to do with the company's profit.

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Regards
     Stephen

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Le 17/02/2015 12:57, scott a écrit :
>>> And don't forget in your example above the UK government will get far
>>> more in VAT than the Dutch government will get in tax,
>>
>> Sorry, could you explain the significance of that?
>
> That the UK government don't get "nothing" from Starbucks because they
> transferred all their profit abroad.
>
To state the obvious: the UK is taking the VAT, but does not take the 
tax on the profit of the UK-corporation, as profit evaporates via 
administrative (aka non-corporal, you cannot prove it did not 
happened... no traces, but it's "legal") costs.

So instead of 20% of VAT (on full price of sell, let's say £20 out of 
£100 you paid over the year for your coffee) and 28% on 
big-company-profit** ( based on the remaining £80, minus the price of 
water, the wages, the rent of every location, the paid energy, ... and 
so on, from the £70m from £414m, remains something like £16 to be taxed, 
about £5).

Now, with a bit of creativity, these £5 goes to some paradise and the 
budget of UK takes what is missing from the tax-payers pocket.

**: smaller companies have a lower rate, in theory. But the evasion-game 
is played so much by big companies that in fact the small companies are 
more taxed.


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Just because nobody complains does not mean all parachutes are perfect.

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>> That the UK government don't get "nothing" from Starbucks because they
>> transferred all their profit abroad.
>>
>
> I would say that they do get nothing.
> Star***ks only collect the VAT they get from their customers and pass it
> on to HMRC.

And if they made a profit in the UK and paid tax on it, they would have 
to pass on a *little bit* more from their customers to HMRC. That was my 
only point.

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On 17/02/2015 15:29, scott wrote:
>>> That the UK government don't get "nothing" from Starbucks because they
>>> transferred all their profit abroad.
>>>
>>
>> I would say that they do get nothing.
>> Star***ks only collect the VAT they get from their customers and pass it
>> on to HMRC.
>
> And if they made a profit in the UK and paid tax on it, they would have
> to pass on a *little bit* more from their customers to HMRC. That was my
> only point.

Okay. No deeper meaning then. :-)

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Regards
     Stephen

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>> And if they made a profit in the UK and paid tax on it, they would have
>> to pass on a *little bit* more from their customers to HMRC. That was my
>> only point.
>
> Okay. No deeper meaning then. :-)

No none at all :-)

But I guess a result of my point is that having the VAT collected in 
another country (eg if you buy a product online from another EU country 
and have it shipped here, if it's physical) is far worse for the 
government. For example IIRC eBay was "based" in Luxembourg or something 
so the VAT is only 15% on fees - the UK government must lose *a lot* of 
money because of that.

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