Inditex -the owner of such fashion chains as Zara, Uterqüe, Pull&Bear, Bershka, Massimo Dutti, Stradivarius or Oysho- has moved its online operations to the Republic of Ireland in order to take advantadge of the 12,5% flat rate corporation tax available there, the lowest corporation tax in the EU.
This compares favourably with a 30% corporation tax Spains third largest company would have to pay if all this went through Madrid. (Yes, I know they’re based in A Coruña. You know what I mean).
Officially, the company says that it has housed its worldwide online operations in Eire in order to take advantadge of an educated workforce and high speed internet connections. In reality, economists point out that since all shipping and warehousing continues in Spain, the company has basically just shifted for tax purposes. El País says that their new offices are on the 5th floor of Hainault House, St Stephen’s Green, Dublin, with “nice views” over St Stephen’s green. My Irish lawyers were based just round the corner from there.
According to El País, Inditex paid 580 million euros in 2010 corporation tax, which may account for its desire to cut down the cost. It is estimated that 5% of Inditex’s business is online – a turnover of some 743 million euros a year.
Inditex is the first Spanish heavyweight to do this, although most foreign website giants do business in Spain via Irish or Luxembourg companies, with a simple Spanish office working off “commissions” – Apple, Google, Facebook or Amazon.es all do this.
However, consumer organisations have pointed out that since anyone buying from Zara online is now effectively buying from an Irish company, the terms and conditions of sale will now be regulated under the Irish legal system.
Which is probably yet another reason to buy from them….