[Closed] If you were a multi-billionaire and you wanted to go to space....

The "royalties" paid just happen to equal all the profits of the UK part of the company, every year.

So they pay no tax in the UK at all. Ever. No matter how much actual profit they make.

Seems legit.

(It fictional obviously, but it's within the HMRC rules)

It's not actually, many payments that are dependent upon the profits of the company are treated as a dividend for tax purposes and therefore not deductible.

The subtlety of Starbucks's tax planning is that every charge they make to their own shops, they also make to third party franchisees. As the whole basis upon which a country's taxing rights are determined is the "arm's length principle", it is exceedingly difficult to argue that the Starbucks internal payment is wrong because an independent (i.e. arm's length) party is paying it.

Its wrong because its a false charge to avoid taxation

Its one they can do legally but its not a "real" payment except on paper and for the purposes of minimising tax

I dont think anyone is arguing they break the law but no one seems to argue the charges are " real " either just legal.

Drac has posted the correct response to this already. Please go back and review it.

Its one they can do legally but its not a "real" payment except on paper and for the purposes of minimising tax

But they charge it to third parties in the same country, it is real for them - why does it become "unreal" just because it is two parts of the same group?

The area is difficult for policy makers, historic rules aren't working as they wish, especially now we have companies where most of the value is in intangible assets that have no obvious nexus, but they need to be fair otherwise they become distortive.

Really? Its not real because the payment exists only to minimise tax rather than "business need".

You can feel free to disagree and argue they are legitimate payments and the business model is for some reason other than tax minimisation but , tbh, I think even the business would admit this is what they have done.

How do you define "business need", the third party had a business need so why doesn't the related party, your basis seems to be they make loads of money and should pay more tax, you can't legislate like that.

The subtlety of Starbucks's tax planning is that every charge they make to their own shops, they also make to third party franchisees.

Can you explain that some more please?

Penis.

Massive penis.

Obviously a penis.

However, it's now an argualympian circle jerk.

*Wanders off*

Amazingly perceptive straw man there 🙄

Its fair enough to disagree and argue what they do is fine and required for some reason other than tax minimisation but, frankly, I dont believe that you are struggling to grasp the point I am making

tpo repeat

They actively organize their companies in a complicated manner designed SOLELY to avoid paying as much tax as possible. WHilst its not illegal its also not true to say they pay what they have to; what they do is creatively account to pay the least possible they have to even.Many think this is immoral but legal.

British Starbucks stores. Campaigners point out that since first opening its doors in Britain in 1998 Starbucks has paid only £8.6m in corporate income taxes there. In testimony last month before a parliamentary committee, Starbucks had said this was because it had made a profit in only one year in Britain, though it also admitted that its British business had made large payments for coffee to a profitable Starbucks subsidiary in Switzerland and large royalty payments to another profitable subsidiary in the Netherlands for use of the brand and intellectual property.....

Junkyard, was that before or after they "came clean" for the media and made voluntary payments?

EDIT it seems that you quoted an article that also mentioned the voluntary payments.

I am not really trying to argue a point, I am just trying to outline how policy makers are faced with a difficult challenge based on the way countries have agreed to define their taxing rights in cross border situations. I did this because the debate on here on this subject is not unsurprisingly ill informed. I am sorry to disappoint.

Molgrips - another time, I think we have digressed enough.

hey you played the man this time Well done - somehow again you managed to miss addressing the point made whilst bringing the debate up to speed with some more logical fallacies and a decline to debate.

Thanks for the valuable contribution to understanding 😕

I am sorry if you feel that a general comment about how informed a debate was was a personal attack on you. It wasn't. To be honest, what is written in the press on the subject is ill informed too. The simple fact is I used to work in international tax so I have a reasonable understanding of how systems work, I am out of date now on the technicalities but the basic principles are the same, and too often incorrect assertions are made on here and in the press.