Multinational Starbucks has seen its UK arm pay £8.1m in corporation tax in 2015, almost equivalent to its entire tax payment over its first 14 years in the UK, after responding to pressure to scrap its complex tax structures and the decision to relocate its European HQ to the UK
The coffee chain came under intense pressure after research in 2012 showed it had paid just £8.6m in tax on £3bn in sales since it launched in the UK in 1998.
The latest accounts show pre-tax profits jumped to £34.2m in the year to 27 September, compared with less than £2m the previous year, while sales grew by 3.8%.
The corporation tax figure for 2014 was higher at £ £11.2m, but this payment was related to a £20m tax deal Starbucks struck with HMRC which included a ‘voluntary contribution’ to pay more tax after MPs slammed the company’s accounting practices as ‘immoral’.
This is the first tax payment since the group’s decision to move its European headquarters to the UK in April 2014, where more than half of its European stores are located.
Kris Engskov, Starbucks president for Europe, the Middle East and Africa, said: ‘Profits are up by more than £30m as we have invested in the store experience while managing our costs. As a result, our corporation tax payments also increased.
‘Thanks to the commitment and hard work of our partners (employees), Starbucks has delivered its largest ever after-tax profit since opening in the UK in 1998.’
In October, Starbucks and Italian carmaker Fiat were ordered to repay up to €30m (£22m) after the EC found that deals struck between the coffee chain in the Netherlands and the car maker in Luxembourg effectively amounted to illegal state subsidies that must be repaid.
Sign up to our newsletter
If you would like to receive regular news alerts about breaking news and developments in tax, accounting and audit, sign up to receive our free newsletter here
