Inditex's response to ‘Tax Shopping: Exploring Zara's Tax Avoidance Business' report

Inditex complies with prevailing tax legislation in all the 93 markets in which it operates.

The Inditex Group's effective tax rate was between 22% and 24% from 2011 to 2015, depending on the results of the group's various companies and the corporate tax rates in each country. By way of example, the statutory corporate tax rate in Spain stands at 25% compared to 20% in the UK, 28% in Germany, 16% in Romania, 20% in Russia, 12.5% in Ireland, 19% in Poland, 25% in China, 33.33% in France, 29% in Greece, 27% in Italy, 25% in Austria and 20% in Turkey.  

The report refers to the period between 2011 and 2015. Over that time Inditex contributed more than €4.4 billion of corporate income tax worldwide.

During that same period, it contributed €2.2 billion of revenue to the Spanish state, which represents over 2% of the country's total corporate tax revenue collection.

Inditex adopts a highly responsible tax policy in all the markets in which it operates.

All Group companies are fully transparent and details on each can be found in the Annual Report.

Transactions between Group companies are audited regularly by the tax authorities in each country.

The Inditex Group is vertically integrated. It is active in every step of the garment industry value chain (design, manufacturing, distribution and sale). Each step in the value chain is carried out in multiple countries and each of these countries has its own tax law. Inditex Group works with over 400 companies and all transactions are carried out on an arm's length basis, in keeping with prevailing tax legislation in each country and the OECD's Guidelines on transfer pricing.

The report claims that Inditex has saved €585 million using "an aggressive tax avoidance policy in Netherlands, Ireland and Switzerland".

Inditex believes believe that the report is based on erroneous premises that lead it to mistaken conclusions.

By way of illustration, on account of their significance and without purporting to be exhaustive, Inditex notes the following:

  • The report makes a grave error by claiming, for example, that the Spanish state has foregone €218 million of tax revenue in the form of industrial property rights. Indeed, Spanish companies do not pay for their industrial property rights, rather they generate operating profits therefrom.
  • The report makes another serious mistake when it states that ITX Merken acquired the aforementioned rights for €1.47 billion, thereby eluding to the payment of €84 million of tax to the Spanish authorities. The truth, on the other hand, is that the full €1.47 billion is subject to taxation in Spain at the statutory tax rate (30% and subsequently 28% during the period covered by the report). Indeed, this transaction alone generated over €360 million of tax revenue for the Spanish tax authorities.
  • ITX Fashion. At present, this company oversees the e-commerce business in three countries: Japan, the US and Canada. As previously stated each country's online business ultimately gets folded into each market's business structure, in line with the Group's strategy of integrating its offline and online businesses.
  • ITX Financien. Several entities engage in financing the Group companies, depending on country risk, currency and operating criteria. They all, notably including ITX Financien, comply rigorously with market standards. 
  • ITX Trading. The Group purchases merchandise from suppliers, manufacturers and traders. To do so it has specialist buyers. These professionals carry out their remit in different jurisdictions and belong to different companies, giving rise to intragroup transactions that are conducted in line with local legislation and OECD guidelines.