Starbucks Pays UK Corporate Tax for First Time in 5 Years

For years, Starbucks faced public and political backlash in the UK over its minimal corporate tax contributions despite massive sales—raising the question: when will the coffee giant finally pay its fair share? In mid-2013, the company made its first move.

On June 23, 2013, Starbucks announced it had paid £5 million in UK corporate tax to HM Revenue & Customs. This marked the first payment following its December 2012 promise to the UK government—and the first time in five years.

How Much Has Starbucks Paid—and Promised—in UK Tax?

Beyond the £5 million paid in June 2013, Starbucks stated it would pay another £5 million in the second half of 2013, bringing the total for that year to £10 million. For 2014, the company committed to paying £10 million in UK corporate tax.

Why Did Starbucks Avoid UK Tax for So Long?

Over its first 15 years operating in the UK, Starbucks reported £3 billion in total sales—but paid just £8.6 million in taxes. Notably, it paid zero corporate tax in the UK for the three most recent years prior to 2013. To reduce its UK tax liability, Starbucks routed sales through subsidiaries in the Netherlands and Switzerland, which had lower corporate tax rates. While the UK charged 25% VAT on coffee sales at the time, Switzerland applied a much lower 12% VAT.

What Was the Public and Political Reaction?

The UK’s parliamentary public accounts committee, led by MP Margaret Hodge, welcomed Starbucks’ first tax payment but insisted that “businesses should not have a choice over how much tax they pay.” Hodge called for mechanisms to ensure fair taxation for all. Even UK Prime Minister David Cameron weighed in, telling the World Economic Forum in Davos on January 24, 2013, that tax-avoiding companies needed to “wake up and smell the coffee”—a remark widely interpreted as a jab at Starbucks.

Why Did Starbucks Finally Pay UK Tax in 2013?

While the article does not detail the internal decision-making, the public pressure—including scrutiny from government officials, media criticism, and consumer awareness campaigns—appears to have played a major role in prompting Starbucks to begin meeting its UK tax obligations starting in June 2013.

Frequently Asked Questions

How much tax did Starbucks pay in the UK in June 2013?

Starbucks paid £5 million in UK corporate tax to HM Revenue & Customs in June 2013. This was its first such payment in five years.

Did Starbucks pay any UK tax before 2013?

Starbucks paid only £8.6 million in UK taxes over its first 15 years in the country, and paid zero corporate tax in the UK for the three years prior to 2013.

What were Starbucks’ tax pledges for 2013 and 2014?

Starbucks pledged to pay £5 million in the second half of 2013 (in addition to the £5 million paid in June), totalling £10 million for 2013. It also committed to paying £10 million in UK corporate tax in 2014.

Why did Starbucks route sales through the Netherlands and Switzerland?

To reduce its UK tax burden, Starbucks used subsidiaries in the Netherlands and Switzerland. At the time, the UK charged 25% VAT while Switzerland’s VAT on coffee was 12%.

What did UK politicians say about Starbucks’ tax payments?

MP Margaret Hodge welcomed the first £5 million payment but stressed that tax payment should not be optional. Prime Minister David Cameron referred to tax avoiders needing to “wake up and smell the coffee” at Davos 2013.