Today, friends from my French university showed me a fairly shocking article from BFMTV, an important news source in France. This article, amongst others in French media, explains that Starbucks has not paid any taxes on profit in France since its installation in the country. A similar article in English can be found on The Guardian’s website. Indeed, Starbucks has apparently been using the same tactics in the United Kingdom and other european countries. In 2011 in France, Starbucks recorded net losses of €2.5 millions… but told investors in France it actually earned a profit.
How does Starbucks manage to record net losses? Apparently, Starbucks’ fiscal optimisation relies on heavy cash flows between different regional organizations, in the United States, in Netherlands or Switzerland. This allows the company to pay little to no taxes thanks to well-used optimisation.
This directly ties back to our class on business ethics: is it ethically acceptable for a firm with such tremendous profits as Starbucks to continiously avoid taxes thanks to clever financial operations? I personally found these articles shocking. A company is expected to give a part of its earnings to the State and population that host it. But Starbucks does not seem very willing.