So this is interesting about Starbucks and that Swiss payment for coffee

Remember all that fuss about Starbucks and the way that it paid a 20% margin to Switzerland for the coffee beans? A terribly naughty attempt to dodge the British corporation tax righteously due we were told.

Or, as others put it, and entirely normal margin being paid on an inter-group transaction. For the Swiss corporation must, in a world of anything even pretending to be arms length transactions, make a profit or a margin.

But the interesting thing today is how important is this number?

Cost of actual coffee in a medium £2.20 cappuccino amounts to 8p

Hmm. So coffee is 4% of turnover? Not accurate but it’s a reasonable guess, it’ll give us something like the right order of magnitude at least. And that horrible margin paid over to the dastardly tax dodging Swiss was 20% of that. So, 0.8% of turnover.

Turnover was £400 million or so. The gross amount of that margin paid over to the Swiss in an attempt to dodge taxes was £3.2 million then.

And, as I’ve explained before, even when you add that back in then Starbucks was still making a loss.

Remember, the complaint is about the 20% margin paid on that coffee bill, not the coffee bill itself. Everyone, at least I hope everyone, accepts that the coffee bill to a chain of coffee shops is an allowable expense.

So that margin is £3.2 to £4.8 million.

Which is still less than the £5 million loss which means that the reason Starbucks don’t pay tax on its profits in the UK is because it don’t make a profit in the UK.

Something which, if I’m honest about it, seems reasonable enough really.

And UKUncut can fuck off ‘n’all.

6 thoughts on “So this is interesting about Starbucks and that Swiss payment for coffee”

  1. Incredible that people still believe that the cost of coffee is mostly from…the coffee.

    Do the Lefty loonies not understand rent or are they deliberately ignoring it?

  2. I am too lazy to go back to the original claims, but weren’t / aren’t there also royalty payments to with the the Starbucks brand which are made to/via Switzerland?

    It’s not just the beans.

  3. @ Dearieme

    “where do they find all the mugs to pay this for that?”

    In the middles of towns and cities.. and service stations.. and airports.. and anywhere else that people often find themselves wanting a coffee and not having the means to whip one up themselves.

    It’s a competitive market (even motorway services now usually have at least three different coffee buying options) so we can be content that the consumer isn’t being especially gouged.

    I’m happy pay two or three quid for a half decent* coffee when I’m out somewhere. Granted, when I do that I sit down and relax in the place I bought it.. so I’m paying for that too (and most of the price is, indeed, the cost of the premises) so the people who have theirs in a paper cup and drink it whilst walking down the street are getting a bum deal and, indeed, probably subsidising those of us who sit at a table enjoying the wi-fi. And long may they continue to do so.

    (* ‘half decent’ does tend to rule out Starbucks, in my experience. But Costa is fine, as are any number of other places, and the pricing doesn’t differ all that much).

  4. dearieme – that’s a bit like going into a pub and complaining that a pint is £5 when you can get the same at Tesco for £1.50

  5. “the people who have theirs in a paper cup and drink it whilst walking down the street are getting a bum deal”: them’s the ones. The mugs.

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