How IKEA is structured to minimize tax and maximize control

"FEW tasks are more exasperating than trying to assemble flat-pack furniture from IKEA"<p>Am I the only one that enjoy assembling flat-pack furniture and believe it is extremely easy?.

To be fair, Ikea founder Ingvar Kamprad just recently admitted (2011) to the existence of the ownership foundation.<p>&#62; In an email from Ikea sent to the TT news agency, Kamprad admits that the Interogo Foundation in Liechtenstein exists and that it owns Inter Ikea Holding SA, which in turn owns Inter Ikea.<p>"Interogo Foundation is a company foundation whose only goal is to invest in the expansion of the company business and secure its long-term survival. In other words, the assets of the Interogo Foundation are held as financial security and are only used if Inter Ikea has financial difficulties," wrote Kamprad.<p>"The assets can also be used to support individual Ikea dealers who have financial difficulties or for philanthropic purposes. Interogo Foundation is controlled by my family and is administered by a board of directors consisting only of outside representatives." he added.<p><a href="http://www.thelocal.se/31650/20110126/" rel="nofollow">http://www.thelocal.se/31650/20110126/</a>

This is a pretty common scenario for international companies. Maybe most of them do not go as far as IKEA and lock their whole corporate structure, but most of them manage to achieve pretty low corporate tax rates. As an example Google was estimated to achieve an effective tax rate of only 2.4% [1]<p>[1] Source: <a href="http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html" rel="nofollow">http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...</a>

Love it. Makes my furniture cheaper.<p>The only thing unethical about it is that these tax avoidance schemes have inherit economies of scale - startups can't afford the advice.<p>The solution is not to eliminate the tax paradises (which would cause a revolution btw), but to eliminate the tax code altogether.<p>If your ideology insists on coercion than at least make it a flat rate.<p>Edit: I get accused of supporting corporatism below. I don't. I just support anyone to avoid taxes as much as possible and oppose all forms of collectivism.

What's with posting articles from 2006? There are more recent sources with updates, including from FT.com (behind a paywall) and the investigative documentary about this which aired last week in Sweden: <a href="http://translate.google.com/translate?hl=en&#38;sl=sv&#38;u=http://svt.se/2.150075/1.2304474/granskningen_av_ikea_ett_brett_samarbetsprojekt" rel="nofollow">http://translate.google.com/translate?hl=en&#38;sl=sv&#38;u=...</a>

They should come to Belgium. We have something called 'notionele interest aftrek' (<a href="http://www.kpmg.com/BE/en/Whatwedo/Interests/NotionalInterestDeduction/Pages/default.aspx" rel="nofollow">http://www.kpmg.com/BE/en/Whatwedo/Interests/NotionalInteres...</a>).<p>As an example:<p>Suez Tractebel, Energy Europe Invest en GDF Suez CC had a profit before tax : 4,8 bilion euro.<p>Together they payed 2,3 milion euro tax. This is a tax rate of 0,049%.<p>Oh these are the Gas &#38; electricity companies in Belgium.

I always think of that when I see a PBS show like NOVA, sponsored by the Howard Hughes Medical Institute. At one time, they owned Hughes Aircraft, mainly as a tax dodge for Howard Hughes. The tax dodge has long outlived the company.<p><a href="http://en.wikipedia.org/wiki/Howard_Hughes_Medical_Institute" rel="nofollow">http://en.wikipedia.org/wiki/Howard_Hughes_Medical_Institute</a>

What's terrible about IKEA's whole tax avoidance scheme is that it gives an unfair advantage to IKEA over Target, Walmart, etc. who are all presumably paying expected amounts of corporate tax and additionally, by virtue of being public companies, provide a great amount of transparency versus IKEA.<p>Another example of a business built in part on a tax loophole--Amazon.com and its online brethren whose customers generally don't pay sales tax. That's a huge, unfair retail advantage compared to Barnes &#38; Noble and other brick-and-mortar stores, especially since retail margins are generally so thin.

The story would be much different if Ikea's owners were American.<p>American citizens don't have the same affordances as foreign nationals when it comes to tax minimization. If these foundations for Ikea were majority owned by Americans, they would be subject to taxation by the IRS, regardless of in which country they were created.

This is an amazing write-up i read to counteract the piece about google's tax avoidance... I had to find it on another site though, how do you get the link to go around the paywall?

Google cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda (Double Irish).