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The three things that stood out for me were:

1 Starbucks lumped National Insurance into their tax bill

2 They pay "branding rights" to the parent corporation

3 They make almost no profit in the UK

The first point is that NI is pretty much unavoidable anyway, so including it doesn't really make you look great. Only really low-level tax evaders try to get out of NI and PAYE.

The branding rights is an obvious avoidance measure. They don't have to pay this, since Starbucks UK is wholly-owned by their US headquarters (and if they're not, they may as well be).

The final point actually follows from the second: they don't report high profit because it's all syphoned off via branding rights. Do they seriously expect people to believe they operate in the UK purely out of the goodness of their hearts?




> The first point is that NI is pretty much unavoidable anyway, so including it doesn't really make you look great. Only really low-level tax evaders try to get out of NI and PAYE.

IANATL but do Starbucks even have any PAYE or NI tax to pay? Isn't it their employees that pay that? Just because Starbucks happen to take the money off of your pay cheque for you doesn't mean that it's not your tax liability that's being paid for.

Not having your employees systematically avoiding tax (e.g. like what happens at some levels in the civil service) is great and all but it's not like Starbucks are out there preaching to their employees about how awesome it is to be a tax payer.

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In the UK, PAYE and NI are deducted from your headline wage, but then the employer has to pay an additional NI contribution on top of that, which is what Starbucks are presumably referring to. Employers aren't allowed to deduct this from staff wages, so instead they simply pay staff a lower wage to start with.

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Employers pay contributions to the employee's NI. I don't know the exact ratios, but it's non-trivial.

I threw PAYE in there, since NI and PAYE tend to go hand-in-hand. Looking at it again, I probably muddied my explanation somewhat.

Starbucks aren't preaching to their employees, but they are trying to claim moral credit for paying a tax that's not worth their time to get out of paying.

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The film industry does something similar to what Starbucks is doing (and I am guessing many major brands). 'They pay "branding rights" to the parent corporation' This increases their overhead and is a major reason why most films are not "Profitable", but they are if you take out this brand licensing fee. Because many taxes and bonuses are based on profit companies can save huge amounts of money.

Also, does anyone know if the company that owns the Starbucks brand is located in the USA? My guess is that it is not due to tax reasons.

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The Starbucks brand is controlled via a corporate entity in the Netherlands. This is pretty common; IIRC Ikea does the same thing.

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I don't know about Starbucks, but I know Google does the same thing and pays branding rights to their Irish HQ.

Unfortunately, I can't find the article that details it. If I can, I'll post it.

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