Starbucks has caught the attention of European regulators because of its tax practices in the EU.
According to a Wall Street Journal report, the coffee chain raised eyebrows by “reporting losses in its biggest European markets” even though it was also notching “hundreds of millions of dollars in annual sales.”
At issue among regulators in the EU is a deal Starbucks made with the government in the Netherlands.
That deal allegedly puts Starbucks in a favourable tax position, allowing it to pay a questionably small fraction of its earnings on corporate taxes. The WSJ reports some of the numbers of concern here are the less than 1% corporate tax (2.6 million euros) Starbucks’ business in Amsterdam paid last year on about 407 million euros in before-tax profits.
Starbucks has been accused of creative accounting before — including in 2012, when it was caught telling investors it was profitable in the UK, while reporting losses to the government. At the time, Starbucks defended itself, saying, “we seek to be good taxpayers and to pay our fair share of taxes.”
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