Corporate Tax Avoidance: Zara fashion brand owner amasses $10bn property empire
Corporate Tax Avoidance: Inditex, the Spanish owner of Zara, this week announced its first fall in annual profits in five years as the world’s biggest fashion retailer invested in stores while foreign exchange rates moved against it. However, Amancio Ortega Gaona, founding chairman of Inditex, with a stake of 60% in the listed group, at 77 has a net worth of $64bn – – up $26.5bn in the past two years – – and is the third richest man in the world according to Forbes latest billionaire ranking.
Jesse Drucker of Bloomberg News says in a report published on Wednesday that Ortega has a property empire worth $10bn and “in the past four months alone, Ortega has spent almost $1bn purchasing properties in Manhattan’s meatpacking district, London’s West End, Beverly Hills’ Rodeo Drive and Barcelona’s main shopping drag, Passeig de Gracia. He recently paid one of the highest prices per square foot ever for a London office building.”
Last month Jesse Drucker reported that in “the past five years, Inditex has shifted almost $2bn in profits to a tiny unit operating in the Netherlands and Switzerland, records show. Although that subsidiary employs only about 0.1% of Inditex’s worldwide workforce, it reported almost 20% of the parent company’s global profits last year, according to company filings.
In part because of this profit shifting, Zara reports narrow margins in many high-tax countries, trimming its taxes in some of its biggest European markets. In Italy, Germany, France and the UK, Zara has recorded average profit margins from 3 to 5% since 2009, corporate filings show.”
Reuters reports that Inditex posted pre-tax profits for the year to 15 March slipped 2.5% to €3.05bn despite a 4.9% rise in sales to €16.72bn as consumer spending bounced back in southern European markets.
Inditex, which owns the Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Lefties and Urterque brands as well as Zara, also revealed plans to increase investment in refurbishments and new stores from €1.2bn last year to €1.35bn, allowing it add up to 500 new stores this year compared to 330 in 2013.