Zara's parent company accused of tax evasion

According to the European Greens, Spanish fashion group Inditex – which owns chains like Zara and Massimo Dutti – has evaded corporate tax on a massive scale.

“Fiscal optimization” worth 500 million

The party claimed that Inditex evaded about 585 million euro of corporate tax in the 2011-2014 period. An economist at the University of Barcelona calculated that the company paid 2.7 billion euro in taxes (which is about 23 % of its profit), but without that “fiscal optimization”, it should have paid 28 % of its profit.

Inditex apparently took advantage of legal paths through Switzerland, Ireland and the Netherlands. “A trade corporation in Switzerland, where taxes are low, actually buys clothes from Bangladesh, China or Morocco, while the group’s insurances and loans come from fiscal paradise Ireland. The fashion brands’ management is directed from the royalty-friendly Netherlands, where it has an overarching holding”, Belgian business paper De Tijd writes. It also points out that Inditex previously managed its real estate from Luxembourg and its eCommerce activities from Ireland, but no longer “uses both countries for these practices”. 

The Spanish fashion giant pointed out in its own response that its “effective tax rate was between 22% and 24% from 2011 to 2015” and mentioned the tax rates in a whole range of countries where it is active: “20% in the UK, 28% in Germany, 16% in Romania, 20% in Russia, 12.5% in Ireland, 19% in Poland, 25% in China, 33.33% in France, 29% in Greece, 27% in Italy, 25% in Austria and 20% in Turkey. The company also says it “adopts a highly responsible tax policy in all the markets in which it operates” and that all of the details are present in its annual report.

Inditex is not the first major retailer in the European Greens’ crosshair, because the party also demanded an enquiry in furniture store chain Ikea’s “fiscal tricks” earlier this year. .