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Starbucks’ European HQ to move to UK

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The US coffee chain Starbucks has announced that the company is to relocate its European headquarters – currently located in Amsterdam, The Netherlands – to London by the end of 2014, following pressure from politicians and tax campaigners over its corporation tax row.

‘This move will mean we pay more tax in the UK,’ Starbucks said, adding that the coffee giant would ‘better oversee the UK market’ from the capital. According to Starbucks, the UK is its largest European market and the move will base a ‘modest number of senior executives’ in its London operation.

However, Pinsent Masons partner Heather Self says: ‘If you look at the tax that Starbucks pays globally, moving their European headquarters from the Netherlands to the UK will not impact greatly on the overall tax that they pay.

‘The government has introduced a series of measures to make the UK more attractive to multinational companies like Starbucks. For example, dividends received and paid are exempt from tax and UK corporation tax has also just been reduced (in April) and will be cut again next year. If royalties continue to be paid to the EMEA holding company, these will become UK income rather than being taxed in the Netherlands. This will increase the UK tax payable, but may reduce the overall tax bill as the UK rate of 21% (20% from 2015) is lower than the Netherlands rate of 25%.

‘While locating a European holding company in the UK isn’t tax free, there are many benefits to establishing your headquarters here. The government is making efforts so that the UK can compete with other European tax regimes.”

Self noted that: ‘Aside from tax considerations, more than half of Starbuck’s branches are in the UK – so it makes a lot of sense to establish the European headquarters in the UK.

‘Starbucks came under a sustained campaign over the tax they pay in the UK so this moves sends a clear signal to their critics that they are committed to the UK and will pay the tax due. Given the company’s commitment to Britain, it also is good business sense to headquarter here.’