

IKEA: Flat-pack accounting (2006) - InclinedPlane
http://www.economist.com/businessfinance/displayStory.cfm?story_id=6919139

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felideon
Please tell us about the time you most successfully hacked some (non-computer)
system to your advantage.

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rcmorin
Here's a diagram of the fund structures:

[http://landofthefreeish.com/wp-
content/uploads/2009/02/ikea-...](http://landofthefreeish.com/wp-
content/uploads/2009/02/ikea-tax-evasion-scheme.png)

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geocar
403_http_forbidden

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staunch
Anti-hotlinking. Copy/paste the URL into a new tab (so there's no referer).

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canoebuilder
Or, how about a link to the document in which the image is embedded -
[http://landofthefreeish.com/offtopic/ikea-has-the-most-
aweso...](http://landofthefreeish.com/offtopic/ikea-has-the-most-awesome-tax-
evasion-scheme-ever/)

I know linking directly to image files is in some circles the hip thing to do,
but I don't get, as it creates a frustrating dead end if one is interested in
more information on the subject that may be on the page with the image or
available from following a link on the page.

And, apparently this site admin doesn't like it.

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sachinag
That site admin also stole the entirety of the article from the Economist.

So I stole his image and threw it up on imgur: <http://i.imgur.com/Qov1B.png>

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xcombinator
I don't see anything bad with that. IKEA is a non profit and its rules apply.
Dereck did that too:

<http://sivers.org/trust>

Ingvar Kamprad is the prototype of Calvinist, hard working, humble and low
expenses man. When he came here to Spain, to visit IKEA's stores, he used
regular line airplane, and public bus transport.

IMHO, he don't want to make his family stupid rich(think Gucci family,wasting
on luxury, power, drugs, sex, fights for the money and murders between them)
when he is dead, but wants them to have something they can make a life from.

~~~
gwern
> Ingvar Kamprad is the prototype of Calvinist, hard working, humble and low
> expenses man.

Ebenezer Scrooge was hard-working and low-expense too. Would he have been a
great and charitable man if he had just been a little less arrogant?

> IMHO, he don't want to make his family stupid rich(think Gucci
> family,wasting on luxury, power, drugs, sex, fights for the money and
> murders between them) when he is dead, but wants them to have something they
> can make a life from.

How many billions, exactly, does that require? (Feel free to round to the
nearest hundred million.)

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byrneseyeview
I wonder: if IKEA had been paying income taxes all along, how much less in
_personal_ income taxes would they have generated?

Corporate income is the single source of income most likely to be productively
reinvested, because corporations function more like _homo economicus_ than any
other kind of entity. And since they're entirely owned by either a) people, or
b) charities, it doesn't make sense to talk about taxing corporations instead
of individuals--rather, you should refer to corporate income tax as a tax on
individuals and nonprofits, instead of just individuals.

From that perspective, IKEA pays the socially optimal corporate income tax:
zero.

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jacquesm
If corporations are 'incorporated' they become citizens, citizens pay tax. You
can't have it both ways.

~~~
byrneseyeview
Citizens also vote. I've never understood why people consider 'corporate
citizenship' so meaningful; it's a terse description of a legal hack, not some
profound statement about what a corporation is.

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patrickgzill
Similar structures using foundations have been used in the USA for many years,
at least since the 1950s if not before.

Congress investigated in 1952-53...

<http://en.wikipedia.org/wiki/Reece_Committee>

While it was not the thrust of the investigation, it did come to light that
many rich people were using foundations as a way to shield themselves from
taxes or to retain control of a company via a two-tier voting class for
shares.

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pwim
Note that the article is from May 2006.

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icey
Are you aware of what (if anything) has changed significantly since then?

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JimmyL
As far as I know it hasn't - there's an article like this every year or so in
the British press, and they all have similar conclusions.

Furthermore, if the linked article is right, it should be pretty difficult to
change this structure.

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stse
I think it's a shame they are using these kinds of aggressive tax planning
tactics, while still marketing themselves as being Swedish/Nordic. And to put
this view in context, Sweden does not have the same social system as the US.
But this would be aggressive even for an American company.

~~~
henrikschroder
Let's just say that everyone up here doesn't love our high taxes. :-)

You could of course wish that IKEA would pay its corporate taxes like a good
corporate citizen, but maybe the same traits that makes Ingvar Kamprad want to
save expenses on everything, including taxes, is the same trait that has also
made IKEA the huge success it is?

~~~
stse
Expressen recently listed the "top" tax-payers in Sweden [1]. What's
interesting is that the second wealthiest person in Sweden after Kamprad, H&M
owner Stefan Perssson, tops the list and pays more tax than the ten following
people combined. It's also interesting to find one of the investors in Skype
at #4 and one of the founders of MySQL at #11.

[http://www.expressen.se/ekonomi/1.1797308/h-m-miljardar-
beta...](http://www.expressen.se/ekonomi/1.1797308/h-m-miljardar-betalar-mest-
i-skatt)

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sethg
If I understand US law correctly, a non-profit corporation is allowed to own a
for-profit corporation (just like it can own any other asset), but that
doesn’t exempt the for-profit corporation from taxes; it just means that all
the after-tax profits go into the non-profit’s coffers. And when a non-profit
corporation pays its employees or directors, that money becomes taxable
income. Does Dutch law work the same way? How much are the Ikea companies
actually saving from the taxman this way?

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pmjordan
I think the implication is that the main for-profit companies make virtually
no profit at all. The "profit" is emitted via the franchise commission which
is handled as an expense. What exactly happens in the INGKA foundation isn't
clear to me. Presumably the non-profit actually pays the designers who create
the products, handing the designs back over to IKEA.

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brianobush
I think the root of the problem exists in the simple fact that tax laws are
different in various states/countries. Accountants/lawyers are paid to figure
them out, and rewarded well when they find benefits to the myriad of rules and
regs. I was even employed once to optimize a large corporation with 100s of
entities in different taxing regions. I enjoyed the work, but it was evil
(only looking back in retrospect of course).

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TriinT
Have you watched the _Tax me if you can_ documentary? You might enjoy it:

<http://www.pbs.org/wgbh/pages/frontline/shows/tax/>

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brianobush
thanks, I will check it out.

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richardburton
When reading a story like this it's hard to know whether to smile wryly at the
accountants' ingenuity or weep quietly at the injustice of it all.

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TriinT
Where's the injustice? I doubt the Kamprad family has cost the Swedish welfare
state what the state wants to tax them. He's merely doing what's best for him,
instead of subsidizing the education and medical care of other parents'
children. Frankly, I don't see any injustice.

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chaostheory
US politicians are learning this trick too.

While non-profit foundations belonging to US politicians typically don't own
shares of corporations, it's very hard to see these non-profits doing any
charitable output; a lot of these organizations just have huge administration
costs: plane tickets, dinners, and so on

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cmelbye
I think systems like this are in place in many different companies.

