Starbucks use offshore companies
Starbucks use offshore companies to avoid paying UK tax. It seems that they have paid no Corporation tax in the UK for the last three years. They have paid only £8m, it seems since 1998. This is despite sales of £3 billion in the UK.
So, how do Starbucks use offshore companies to avoid UK tax? It’s the same way as UK contractors. They fund their operations in the UK via loans. They also pay consultancy fees to offshore companies which they set against profit. They also charge their UK division for the use of the brand name Starbucks. This means that they make no profits in the UK once expenses and fees are taken out. Therefore they pay no tax in the UK. It is all perfectly legal. Starbucks use offshore companies to feed their profits into. In the jurisdictions of these offshore companies they pay a lot less Corporation Tax than they would pay in the UK.
It’s all a bit smoke and mirrors but perfectly legal. Big corporations and wealthy businessmen have been doing this for years. Just like Starbucks uses offshore companies so do those corporations and businessmen. Starbucks would argue that it is their duty to shareholders to minimise the tax they pay and the profits they make. Indeed, it is their corporate duty to do so. It is up to countries where they operate to set the tax rules and Starbucks to follow them. They would argue that they do this.
It is something that freelancers have cottoned on to late. They used to operate out of Limited Companies. Then many used onshore Umbrella Companies. Now, more and more are using offshore umbrella companies. They pay money into offshore trusts and receive money back as loans. It’s just like Starbucks. It’s all perfectly legal. The government have admitted it.
For a selection of good Umbrella Companies check out Which Umbrella Company