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This Is How IKEA's Tax Scheme Works

An Ikea store in California
An Ikea store in California

LEIDEN — Over the years, several journalists have dug into the corporate structure of Swedish furniture giant IKEA and the business dealings of founder and CEO Ingmar Kamprad. But the probes have turned up little dirt.

But now, the European Parliament's Green Party group say they have managed to map out IKEA's complex revenue scheme they believe has allowed the company to dodge some one billion euros in taxes, reports Swedish daily Dagens Nyheter.

It was at European Parliament hearing in November 2015 that the Norwegian-born former French magistrate and Green party leader Eva Joly became interested in IKEA.

When IKEA's director of corporate finance, Krister Mattsson, told the hearing that the multinational was often confused with the company Inter IKEA, Joly and other EU Green Party officials were curious to know more. Now in a report released over the weekend, Joly's party says it can trace how the Swedish company moves money around different parts of the IKEA Group between different countries to minimize its tax burden. This is how they say it works:


• IKEA stores pay 3% of their profit in royalties to Inter IKEA in the low-tax Netherlands (IKEA is the furniture company, while Inter IKEA owns the trademark and the concept of the brand). By doing this, the taxable profit in eight of IKEA's European subsidiaries is reduced by 35 to 64%.

• Inter IKEA then transfers the money in two directions: one amount goes to an unknown recipient — who may be the former secret Interogo Foundation in Liechtenstein — and a second amount as interest to Interogo Finance in Luxembourg. The interest is due to an internal loan from when Inter IKEA bought the IKEA brand from Interogo Finance for 86 billion Swedish kronor in 2012 (circa 9 billion euros) and borrowed more than half of the money from Interogo.

• This money is not taxed because the Netherlands does not tax royalties and interest money that is sent abroad.

• Interogo Luxembourg then pays the revenue to Interogo Foundation in Liechtenstein. Thanks to a tax treaty with Luxembourg, and because the money is sent out of the country to Liechtenstein, Interogo Finance paid only 0.06% in taxes between 2012 and 2014.

• The Interogo Foundation in Liechtenstein does not need to pay taxes on the revenues it receives because the country does not impose tax on money sent from abroad.

The Green party has now asked the European Commission to review the report and determine whether IKEA has breached any EU law.

In a statement released to Swedish paper Dagens Industri, IKEA said they cannot comment because they have not been shown the report. The company also emphasized that it conducts its business in a responsible manner, stating that "IKEA Group pays taxes in accordance with the laws and regulations wherever we operate through retail, manufacturing, or in any other way."

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Society

Italy's Right-Wing Government Turns Up The Heat On 'Gastronationalism'

Rome has been strongly opposed to synthetic foods, insect-based flours and health warnings on alcohol, and aggressive lobbying by Giorgia Meloni's right-wing government against nutritional labeling has prompted accusations in Brussels of "gastronationalism."

Dough is run through a press to make pasta

Creation of home made pasta

Karl De Meyer et Olivier Tosseri

ROME — On March 23, the Italian Minister of Agriculture and Food Sovereignty, Francesco Lollobrigida, announced that Rome would ask UNESCO to recognize Italian cuisine as a piece of intangible cultural heritage.

On March 28, Lollobrigida, who is also Italian Prime Minister Giorgia Meloni's brother-in-law, promised that Italy would ban the production, import and marketing of food made in labs, especially artificial meat — despite the fact that there is still no official request to market it in Europe.

Days later, Italian Eurodeputy Alessandra Mussolini, granddaughter of fascist leader Benito Mussolini and member of the Forza Italia party, which is part of the governing coalition in Rome, caused a sensation in the European Parliament. On the sidelines of the plenary session, Sophia Loren's niece organized a wine tasting, under the slogan "In Vino Veritas," to show her strong opposition (and that of her government) to an Irish proposal to put health warnings on alcohol bottles. At the end of the press conference, around 11am, she showed her determination by drinking from the neck of a bottle of wine, to great applause.

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