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Comment by objclxt | Hacker News Reader

One of Ikea's greatest innovations (and also the one they keep quiet about) is that it's actually a non-profit organisation. In 2009 Ikea Group made a €2.5 billion profit, none of which was taxed.

Depending on your viewpoint, it's either insanely brilliant or morally bankrupt: the vast majority of Ikea's revenue goes to the INGKA Foundation, a charity which ostensible supports 'innovation in the field of architecture', but only gives 0.2% of its total equity to charitable causes each year.

It makes the fairly standard tax avoidance measures carried out by tech companies like Apple or Vodafone look amateur by comparison!

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It's slightly disingenuous to say "none of which was taxed" when each store and regional organization does pay taxes in the country they're located. The part that's not taxed are the royalty fees paid from each store (franchise system) to the parent corporation (which of course is still a massive amount).

For anyone interested in more information, the Wikipedia article section on IKEA's corporate structure seems to be a good start. There's also a subsection about the "public" outcry over the change from Futuru to Verdana. :)

According to Wikipedia, the royalties -- 3% of the revenue or about €630M -- are taxed, but the company receiving the royalties claims €590M in operating expenses paid out to another company (owned by the same people). Together, those two companies pay about €19M in taxes.

Apart from the royalties, lots of money goes into that infamous "non-profit", I'll quote from the Wikipedia page: The net profit of IKEA Group (which does not include Inter IKEA systems) in fiscal year 2009 (after paying franchise fees to Inter IKEA systems) was €2.538 billion on sales of €21.846 billion. Because INGKA Holding is owned by the nonprofit INGKA Foundation, none of this profit is taxed. The foundation's nonprofit status also means that the Kamprad family cannot reap these profits directly, but the Kamprads do collect a portion of IKEA sales profits through the franchising relationship between INGKA Holding and Inter IKEA Systems.

Regarding the non-profit: estimated net worth of $36B, most of the Group's profit is spent on investments, the foundation expects to spend €45 million on charitable giving in 2010 (the slightly smaller Gates foundation spent $1.5B in 2005).

http://en.wikipedia.org/wiki/IKEA#Corporate_structure

There's also income tax paid by Ikea employees, which I guess is why the Swedish government has let Ikea get away with the rest of it.

Ikea isn't a swedish company it's dutch.

ps this is exactly the same sort of scam (double Irish rather than dutch sandwich) used by Google/HP/MSFT/Dell and every other company operating in Europe

No, it's not 'exactly the same sort of scam' - unless you're trying to tell me that Google, HP, and Microsoft all divert the bulk of their profits through non-profit charities to avoid tax. They divert their profits through holding companies, but these are for profit. Ikea don't do that.

Setting up holding companies in EU to pay minimal tax is standard practice: creating a 'charitable organisation' absolutely isn't. Ikea is a very unique, and in some ways innovative, example of creative accounting.

Occams razor tells me that if IKEA's system saved any more money than Google's etc, Google etc would switch systems.

Yes IKEA is a bit special - at least among companies that don't actually use sawn-off shotguns as part of the sales process!

Employment and income taxes are paid in the country of employment (all Ikea designers etc are based in Sweden)

Some countries allow this culturally so they can bring and keep jobs at home.

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