Ikea is owned by a "charitable foundation," pays only 3.5% tax

Discuss

48 Responses to “Ikea is owned by a "charitable foundation," pays only 3.5% tax”

  1. Lilah says:

    If your internet-article-reading attention span is somewhere between Wikipedia and the Economist, you can check out mental_floss’ article about Ikea’s corporate structure as well http://www.mentalfloss.com/blogs/archives/14675 (a different m_f article than the one posted by #1 Jalvear). Bonus LOL: The comments section quickly becomes a debate on whether IKEA furniture is easy/difficult to put together, while the topic of massive international tax evasion remains largely undiscussed.

  2. TimeMachine says:

    When I do my taxes I take every credit and deduction that I can. I even chose an appliance specifically because it was on a tax credit list. Is that somehow wrong or immoral?

    It’s just silly to criticize a company for minimizing their tax burden. Everybody does this. If the corporate structure is legal then it’s the law that needs to be fixed and the company will follow.

  3. planettom says:

    Their office Christmas parties are filled with drunk, hot Swedish girls, too.

    So many reasons to be jealous of those tax-avoiding Ikeans!

  4. Anonymous says:

    Isn’t it historically true, that when a large percentage of your GDP is tied up by non-taxable entities, either collapse and conquest or revolution and bloody purges soon follow?

  5. dr80085 says:

    “The Berne Declaration, a non-profit organization in Switzerland that promotes corporate responsibility, has formally criticized IKEA for its tax avoidance strategies.”

    Ingvar Kamprad himself now resides in Switzerland, precisely to avoid tax.

  6. Anonymous says:

    The “charitable foundation” status of IKEA is discussed in media in Sweden every now and then. It seems to be one of those news that the editors pick up when there is nothing else to print. For example, a rather well-known tax professor from Sweden is (has been?) on the board of the foundation.

    Just to give some balance to the general view, I’d like to add my 2 cents:
    1st cent: The foundation did try to expand their charity goals recently, to be able to give away more money, but the charter change was rejected in a Dutch court
    2nd cent: The money given to the Kamprads is sometimes used also for the development of IKEA. Regarding IKEAs expansion into Russia, I’ve read that Ingvar Kamprad financed it mostly himself, it was sort of a pet project.

    Anyway, my view is that if their shenanigans are legal, then it is ok. Better to fix loopholes than to ask companies to be nice.

  7. Ugly Canuck says:

    And which non-Swiss-born Swiss resident does not?

    Hey! I’ll race you to the bottom!

  8. gber says:

    On the advice of my attorney, I have been claiming all purchases made at Ikea as charitable donations.

  9. Anonymous says:

    Beware of companies claiming to be all good and friendly and environmental. Has there been an investigation of the Body Shop yet? So much goodness does not come from capitalists, ever.

  10. mdh says:

    I’ve never been in an ikea, though I’ve got a couple of their chairs secondhand.

  11. Anonymous says:

    On the radio this summer in Sweden, Ingvar Kamprad expressed his feeling that he had a duty to make sure that IKEA would continue functioning. A big part of this is to conservatively manage funds, which is a very fitting sentiment given the IKEA furniture prices.

    Essentially, one could view IKEA as a company that exists for the sole purpose of existing. I’m not sure why that would be inherently worse than quarterly-report driven corporations that exist to increase the value of their stocks.

  12. franko says:

    i’m confused by BB’s alternating love/hate relationship with ikea. which will it be next? stay tuned!

  13. Thad E Ginataom says:

    Horrible shop full of horrible things.

    And I speak as an avid shopper, who can visit furniture shops for fun.

  14. airshowfan says:

    #19 FRANKO; BB’s relationship with Disney is similarly non-straightforward. And Apple.

    #12 GARMT; Interesting way to make clear the analogy to darwinian ecosystems. (And I think my lamp might be called “Garmt” ;] ).

    #13 QuickBrownFox and #5 JPW; How can people think that Ikea instructions are complicated? I am always amazed at how well the instructions do at making it clear which fastener is which, which side (of parts that are always almost symmetric but not quite!) is which, and how to put it all together. Anyone who thinks that Ikea instructions are complicated must not have spent their childhood building Lego.

    As for me, if Ikea is not doing anything illegal, then I don’t blame them. If Ikea is doing something unethical but not illegal, then people should make it illegal or stop complaining about it or at least stop shopping there. Which is how I feel about Wal-Mart, too. Practically all my furniture is from Ikea (in part because it’s the only furniture I can easily take home in an Accord), although when it comes to Wal-Mart I usually prefer to vote with my wallet and go elsewhere.

  15. webmonkees says:

    #21 Same thing, only with Salvation Army stuff. About $20 a month there, $240 on taxes. I don’t make enough for it to make any real difference in taxes, though.

    Nearest Ikea store is 124 miles away, a bit out of the way for me. Do they sell a Ikea store kit?

  16. Anonymous says:

    Govt should lower ALL corporate taxes to 3.5%. THAT will fix Ikea!!

  17. Anonymous says:

    PLEASE SHEEPLE HEAR ME OUT I live within my means. My friends and family, we all live within our means. we do good, share, give charity, work, love , live. IKEA is looking for schemes and trying to bring in wealth and power. They are using you as well as others to meet there “NEED$”( THEY DO THIS DAILY, ITS A BUSINESS). Think of it like this, you think oh well its just IKEA trying to make a living not a big deal, but they are actually not making a living they are making an empire. These corporations are huge, rich, and powerful, and usually not fair at all. Will you really just stand back and give them your own personal power . I can spot the people who are not happy with life, they are always searching for money, scheming, searching, looking. Scrape the layer of ego off and join the rest of us. IKEA being run by a NAZI. I liked the comment that says he regrets it. “Really i’m so honest look at my business practices there honest i’m not a nazi anymore you can trust me”

    You mess up in this realm of existence you lose. IKEA you just lost.

  18. Anonymous says:

    @AIRSHOWFAN:
    Now that you mention it, fully half of the usernames in this discussion sound like the names of IKEA products.

    Back on topic, does IKEA’s Euro-tax dodging extend to their stores here in the USA? I won’t pretend to know the vagaries of the tax code, but I would find it amazing (but not necessarily surprising) if Uncle Sam wasn’t getting its arguably fair share of IKEA’s profits.

  19. dculberson says:

    Airshowfan, I don’t find their instructions complicated at all – I actually find them to be too simple. Some times, just a couple of words could explain a situation far more clearly than a line drawing. For example, their kitchen cabinets and the feet arrangement. Egads, just say “For first cabinet in a row, see page 4.”

    Tax avoidance (as distinct from evasion) is a time honored tradition amongst all citizens, whether individual or corporate. I’m not sure scale alone is enough to make it evil.

  20. Anonymous says:

    Oh come on. What large multinational does NOT do anything it can to lower its taxation obligations? How about have an article about how Microsoft, despite the billions it makes in profit every year, is getting millions in stimulus funding from the US government to build a bridge between its two Seattle campuses? Honestly, boycotting a company for a tax dodge is just cutting off your nose to spite your face.

    The way most large companies get tax breaks and sweetheart deals anyway, you’d have to stop buying electronics, automobiles, houses, and food! Besides, noone stopping the Swedish gov from fixing the loophole (ie. auditing the charity, establishing minimum charitable goals before you can claim charity status, etc).

  21. Timothy Hutton says:

    If this is legal, it’s legal, and not a problem, IMHO.

    It seems the argument is that this violates the “spirit” of Sweden’s tax laws, but not the letter of the law. Seems to me Sweden needs to simplify it’s tax code, maybe adding something like “If claiming status as a not for profit, the vast majority of all monies received need to be directed to either documented charity work or known non-profits.”

    Simplifying the tax code will shake out alot of these kinds of “loopholes,” and either increase tax revenues OR force the money to go underground.

  22. Anonymous says:

    I believe Sweden allows them to do this because 3.5% of IKEA’s current gross is more than 40% (or whatever their level of coroporate tax) of nothing and the loss of a lot of jobs.

  23. Timothy Hutton says:

    DR80085 – wrote:

    Ingvar Kamprad himself now resides in Switzerland, precisely to avoid tax.

    Rich people avoiding taxes, unheard of!

    Thank goodness George Soros doesn’t (as just one of many high-profile examples) scheme to avoid paying taxes

  24. happyez says:

    I love comments like “So much goodness does not come from capitalists, ever.” from #22.

    A few bullet points (to synthesise what would normally be a long rave)
    • I am interested in the context and meaning behind the term “capitalists”. WTF is a capitalist anyway?
    • I run my own business, and am about to launch my site in a niche that surprisingly noone is doing, but is likely to be successful. This will bring a good deal of money into my hands. A few years ago, my dad died leaving a good deal of money. I have yet to own a Ferrari, Yacht and other emotionally-appealing but ultimately unsatisfying positional goods. So money hasn’t done anything to me (I imagine like a brain surgeon cuts your head open with his scalpel, so too money turns me into a zombie eating brains for entreés)
    • I have found that money doesn’t ‘make’ you greedy (or me) because that wasn’t conditioned much into me in my early years. I find greediness with energy in relationships, at work, with appliances that ultimately should be dismantled and helped made into a 10-seater HPV van. Money comes into the piece, what, age 15 really. There’s 15 years of learning to be selfish, greedy, vain and other upbringings by negatively-unconscious people. So when these kapitaliztz end up running a company, they are well versed in being sheißeköpfe.
    • A lot of lefties I hung around were terrible at relationships, let along critiquing the world accurately. They wanted to remake the entire system, but pissed on each other and couldn’t keep the house in a sense of balance. Great.

    My main point is:
    • with the (likely) money to be made soon, I have big plans that will fulfil me with greater joy than investing in the sharemarket (really, why would you?). One plan is to buy denuded land here in Aus (cheaply), and hire permaculture people to restore it, then move onto the next bit of land. That means I have been able to move from being a poor greenie to a rich businessperson and keep my dreams. No idea when or how this will come about, but with some good money, I can do something that will give BACK to the planet I live on.

    Here’s a self-made quote that totally makes sense, that came to me recently:
    “The money will come if all the pieces are in place, and one piece is that the money and profit doesn’t matter, and other piece is allow full gigantic profits to come in their own way without impediment (and within certain ethical boundaries pertanent to the business)”

    Ok, enough ernestness for now.

    • Anonymous says:

      whoo hoo! permaculture!
      I think your plan is the only legit thing one can do with money, aside from giving it away to people who need it more.
      p.s. I don’t shop at IKEA because I have more stuff than I need only through finding awesome stuff by the side of the road and occasionally succumbing to thrift store purchases. Buying it new is out of the question.

  25. dragonfrog says:

    JPW – maybe the tax forms in your country are much simpler than in mine. That or you buy far more complicated furniture from Ikea than I do.

  26. Merlin Silk says:

    Wow, hats off to Ikea,
    they are really doing something for freedom – all our freedom. I mean who is the one with monopoly in violence – government obviously. So, anything and anybody who is able to take away some of the power – taxes – that allows this violence-monopoly to go on, has my deepest respect.
    Who does not get any respect are the slaves who lick the boots of their slave masters and cry ‘tax cheat!’ because their master told them so.
    Real people have to resolve their differences with honest co-operation and discussion, the slave master just rattles the saber if somebody even tries to think about breaking their ‘laws’ – rules by the way that some dudes in black robes have concocted to keep them save and the slaves in line.
    Even if Ikea’s owners might be greedy – which I don’t know if they are – the one they kept from stealing it, are definitely the real bad guys.

  27. jalvear says:

    Don’t forget the founder, Kamprad, hung around fascists and Nazis during the 40′s in Sweden.

    http://www.mentalfloss.com/blogs/archives/31198

  28. Cory Doctorow says:

    Well yeah, but he later called it the greatest mistake of his life.

  29. danegeld says:

    Could MAKE magazine cover how to pull off these tax dodges?

  30. Anonymous says:

    Hey kids, here’s another little known fact: all Ikea furniture is made out of homeless people that have been shredded,formed, and compressed. That’s why Sweden has no indigent problem. Think about that while you’re purchasing your Glarnargs and your Blagmorks.

  31. JPW says:

    Gosh, tax forms can’t be any more complicated to follow than, um, IKEA instructions. . . .

  32. drukqs says:

    Cheap furniture is great, but the reality is that the hidden costs are made up elsewhere by lower wages and working conditions, illegal logging in unregulated areas like Burma, Russian far east, and China. Apparently, Ikea to their credit has made efforts to improve their record on sourcing their lumber supply since this 2007 Washington Post expose.

    http://www.washingtonpost.com/wp-dyn/content/article/2007/03/31/AR2007033101287.html

  33. peterbruells says:

    @1 While I’m not a fan of that man, lets not forget that he was a teenager at this time, heavily influenced by his grandmother.

  34. Anonymous says:

    It works for Scientology, it’ll work for Ikea.

  35. Anonymous says:

    I would consider ikea a charitable institution for all of us considering it basically gives away so many of it’s products to us.

  36. Hunter1 says:

    I wish IKEA all the best in their business ventures. Not only is nearly all the furniture and fittings in my house bought from IKEA, their ‘tax dodging’ as some might call it has allowed me to purchase quality goods at unbeatable prices. Power to the consumer! Well, not really. It’s actually power to IKEA’s monopoly in their market.

    Yes, their furniture could be made from Swedish homeless people for all I care. But as far as I’m concerned with IKEA products, they might as well be hand crafted by fair Swedish maidens with ample bossoms.

    Now to look into making my own company a ‘charitable foundation’ ^_^

    - Adam

  37. nosehat says:

    So IKEA is cheating Sweden, or perhaps Holland, out of some taxes?

    Ok.

    Seems like more of a problem that Sweden (or Holland) needs to work on, as opposed to any of us. Doesn’t Sweden (or Holland) have people to work on this kind of thing?

  38. Anonymous says:

    For a sense of perspective.

    Traditional corporations in the United States of America pay taxes on their “net income,” the bottom line of their financial statements. The current cap on these taxes is 33%, though is expected to rise to 39% at some point.

    Basically, corporations pay taxes on their bottom-line profits. Wal-Mart’s revenue last year was nearly $400 billion, but after cost of goods sold, selling & admin expense, and other such deductions, net income was a little over $20 billion; $6.8 billion was paid to the federal government in income taxes. Last year, the federal government received an estimated $221 billion, total, in corporate taxes.

    Ikea’s revenues of $28 billion last year reached close to being 10% of Sweden’s entire GDP. Under United States tax laws (with rates much lower than Sweden’s) Ikea would owe the government over $180 million in taxes.

    As it is, Ikea pays a miniscule proportion of its profits in taxes, due to evasive practices. As a privately-owned firm, Ikea does not even pay a dividend, instead keeping all of the profits to itself.

    In essence, money spent on Ikea furniture is eventually in the control of a multibillion-dollar overseas “foundation” that retains a nonprofit status despite advertising practices that reach even to The Sims computer games.

  39. Ugly Canuck says:

    Charity begins at home, eh?

  40. acb says:

    Ikea catalog from 1965
    Lamp hacked out of Ikea fiber-optics and watering can
    Ikea is owned by a “charitable foundation,” pays only 3.5% tax

    Has Boing Boing adopted Boing Boing Gadgets’ idea of “theme posts”?

  41. Timothy Hutton says:

    Webmonkees asked:

    Do they sell a Ikea store kit

    Yes, but the box is oversize and there is a surcharge over normal shipping charges…

  42. Garmt says:

    The Economist made a pretty good inquiry into the workings of IKEA’s financial structure. I remember my head exploding slightly with outrage and an eery sense of respect for the evil financial geniuses who cooked this up. My professor of Financial Engineering would be proud of them.

    Anyway. The article is two years old but it does provide more detail than the Wikipedia-article, if you’re interested.

    The link is here:
    Economist Article

  43. Takuan says:

    at least a bookcase is not a gun.

    Ever played Dictionary? I propose “IKEA”, the game of sensible, modestly priced lying. Someone poses a putative Ikea name (thank you #4) A round of descriptions attached to the name follows and then the most credible is voted for. Points for original and effective bullshitting. Have a catalog at hand to seed the game with real Ikea items to keep everyone honest.

    Shall we begin with Blagmork?

  44. Garmt says:

    And, #8 – you are correct that Sweden (or Holland) has people to work on this kind of thing, but in my opinion, the battle isn’t exactly fair.

    The way I view it, tax and tax evasion is a race (or a battle, metaphorically). Governments try to create systems which are somewhat fair – meaning that they try to spread the burden of tax. Companies and individuals will likely try to game this system – meaning that they seek to have as little of the burden as possible. People and companies find new ways of evading the burden – governments find new ways of closing loopholes and making the system more “fair”. As such, there’s a race going on – finding loopholes and fixing them.

    Ikea, in this case, has won this race – the value they create has ended up largely with their founder, who’s got MAD MONEYYYY!

    I am, despite my tiny measure of kapitalistik education, of the opinion that the battle isn’t exactly fair, as organisations will very likely be able to attract smarter people and exploit more loopholes than governments. If you’re the top financial engineer of your class, you’re more likely to work for a firm that pays MAD MONEYYY than for a, well, government. If you’re a company, you’re more able to look across boundaries and shift your billions across international structures than the Swedish tax-guy who has to go through fifty million pages of regulations before he can actually make a phonecall to the Dutch tax guy. This ‘battle’ is fought day by day between local tax institutions on the one hand and very smart and very well educated tax consultants from PwC et al.

    So, enter stage right – the consumer. He has power in this battle by chosing NOT TO BUY the stuff that Ikea brings out, if he feels that the wrong that Ikea may or may not do to the world (by evading taxes or slaughtering Swedish babies) does not weigh up against the really good feeling of buying an entire new house for less than four euro’s. Thank you, boingboing and economist, for giving us information that will enable us to make better informed decisions :)

    OK, ok, I’ll stop ranting, sorry.

  45. thequickbrownfox says:

    Kamprad and his Nazi heritage are well known to those who bother to go checking, but this eleemosynary tax-haven is new to me.

    (Hey, this gives me the opportunity to use the word “eleemosynary”!)

  46. Anonymous says:

    Thad, if you visit furniture shops for *fun* then it’s not that shocking you hate them. IKEA is for us who can’t afford true design snobbery, and have to make due with knock-off attitude-y coffee tables.

Leave a Reply