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Zara Under Fire as Greens Warn EU Tax Dodging Still in Vogue

Inditex SA, the world’s biggest clothing retailer and owner of the Zara and Massimo Dutti brands, used “aggressive” techniques to sidestep at least €585 million ($630 million) in taxes from 2011 to 2014, according to Green party lawmakers in the European Parliament.
By
  • Bloomberg

BRUSSELS, Belgium — Inditex SA, the world's biggest clothing retailer and owner of the Zara and Massimo Dutti brands, used "aggressive" techniques to sidestep at least €585 million ($630 million) in taxes from 2011 to 2014, according to Green party lawmakers in the European Parliament.

Without an overhaul of European Union policy, “multinationals and their tax consultants, together with states which choose to engage in destructive tax competition, will continue to get around efforts to clamp down on profit-shifting and tax avoidance,” the Greens/EFA group in the Parliament said in a report released in Brussels on Thursday.

The Spanish clothing giant is the latest target of the Green lawmakers, whose previous reports threw the spotlight on how furniture maker Ikea may have avoided paying at least €1 billion in taxes to European Union nations over six years.

Controlled by Spanish billionaire Amancio Ortega, Europe’s richest person, Inditex posted €20.9 billion in sales last year, from 7,100 stores in 93 countries. Other Inditex brands are growing, but Zara still accounts for two-thirds of sales.

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The Greens’ report comes as the EU probes the legality of tax deals that international companies such as Amazon.com Inc. and Starbucks Corp. struck with governments. The European Commission in August slapped a bill of as much as €13 billion plus interest on Apple Inc. over what it called an illegal accord with Ireland.

Inditex has been using aggressive corporate tax avoidance techniques between 2011-2014, mainly in the Netherlands, Ireland and Switzerland, the Greens said. The techniques used are “currently legal,” but raise “questions whether Inditex pays taxes where its real economic activity takes place,” the report said.

The Greens called for are mandatory country-by-country-reporting “of key financial data,” a common consolidated corporate tax base and a minimum corporate income tax throughout EU.

Responding to the Greens’ report in February, Ikea Group said it paid about €822 million in corporate income tax globally “which equals an effective corporate income tax rate of just below 20 percent.”

At a European Parliament hearing in March, Ikea said its tax affairs are in line with international rules, echoing comments by other firms targeted by EU probes, including McDonald’s Corp. and Apple.

By Stephanie Bodoni; editors: Anthony Aarons, Peter Chapman and Thomas Mulier.

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