Starbucks’ Swiss Scheme: ‘Fair’ Trading or Global Tax Dodge?
Cover of CICTAR’s report on Starbucks
A new report from CICTAR alleges that hidden behind its ‘ethical’ sourcing of coffee beans, Starbucks engages in major global tax avoidance. The report estimates that at least $1.3 billion has been diverted via Starbucks’ Swiss subsidiary over the last decade.
On paper only, all of Starbucks’ coffee – at least 3% of the global coffee bean trade – is purchased via a Swiss subsidiary. This entity, Starbucks Coffee Trading Company Sarl, has marked up the price by a stunning 15-18% before re-selling to other Starbucks subsidiaries for roasting and retailing.
Switzerland is a global commodity trading center and one of the world’s most abused tax havens. Multinational corporate profits artificially shifted to Switzerland significantly reduce government funds needed to pay for essential public services around the world. With Starbucks, this includes the US, by far its largest market.
Starbucks’ Swiss Scheme was first revealed by a European Commission investigation in 2015. When questioned about the mark-up being raised from 3% to 18% in 2011, Starbucks claimed that the cost increase was justified by its ‘ethical’ sourcing program but provided no credible evidence of any increase in costs of running the program, let alone a 15% increase.
“There is nothing ethical or fair about Starbucks Swiss Scheme. This appears to be tax dodging plain and simple and steals money needed to fund public services, including those needed by its underpaid US baristas to make ends meet. If Trump really intends to put American citizens first, rather than US multinational corporations, then his administration should advance reforms that stop Starbucks and other multinationals from dodging US and global taxes by shifting profits to Switzerland.”
For the first time, this report reveals that annual profits averaging $150 million have continued to flow from Starbucks’ Swiss subsidiary. Starbucks positions itself as a socially responsible corporation and charges its customers a premium for its ‘ethical’ sourcing, but it appears that this simply allows it to shift profits to Switzerland and avoiding its obligations to fund services in coffee producing and consuming countries. While there is no allegation that Starbucks has broken laws, it is clearly unethical and demonstrates the urgent need for effective action on Switzerland and other global tax havens.
Read the executive summary in English
Leer el resumen en español
Response from Starbucks
Starbucks was sent a detailed list of questions and offered an opportunity to respond to the key allegations and findings contained in this report. The following is text of an email response from an authorised Starbucks’ spokesperson received by CICTAR on 18 February 2025:
“We appreciate the opportunity to respond to the allegations in your report, which fail to accurately reflect our business model and how different parts of our business contribute to the company’s success.
Starbucks Coffee Trading Company (SCTC) is a critical part of our business—it is responsible for all our green coffee procurement and our Coffee and Farmer Equity (C.A.F.E.) Practices program, one of the most respected and widely implemented ethical sourcing programs in the coffee industry today.
This program ensures that our coffee consistently meets the rigorous quality and sustainability standards that our customers expect. SCTC also operates 10 Farmer Support Centers in coffee-growing regions which support our C.A.F.E. Practices program by providing on-the-ground support to farmers in implementing best practices in coffee production designed to improve quality and yields in environmentally sustainable ways to help ensure the future of coffee for all.
Starbucks pays appropriate and correct levels of tax in all jurisdictions in which it operates and proactively works with tax authorities to inform them of its business model and related tax implications.
Please feel free to visit our About Starbucks post for more information on our C.A.F.E Practices program and let me know if you have any further questions.”