Inditex, the parent company of fashion giant Zara, while a leader in global retail, is once again under the spotlight due to accusations regarding its financial practices. Beyond previous allegations ranging from labor exploitation to design theft, the Spanish conglomerate now faces serious claims of aggressive tax avoidance. A recent report by the Green Party/EFA group in the European Parliament alleges that Inditex dodged a staggering 585 million euros in taxes between 2011 and 2014. To put this figure into perspective for an international audience, particularly in the US, this sum equates to approximately 622 million US dollars, based on exchange rates at the time.
The Green Party/EFA’s report, titled “Tax Shopping: Exploring Zara’s Tax Avoidance Business,” details an investigation into Inditex’s financial records. The findings suggest that Inditex strategically shifted profits to countries with lower tax rates, such as the Netherlands, Ireland, and Switzerland. This was allegedly achieved through royalty payments, a common tactic in international tax planning. The report further claims that Irish subsidiaries of Inditex reported substantial turnovers but declared no employees and paid no corporate tax, raising further questions about the company’s tax optimization strategies.
Inditex corporate headquarters logo, representing the global fashion retail group facing tax avoidance allegations.
In response to these serious accusations, Inditex has vehemently denied any wrongdoing. The company issued a comprehensive statement refuting the report’s conclusions, asserting that it is based on “erroneous premises that lead it to mistaken conclusions.” Inditex maintains that it adheres to tax regulations across all 93 markets where it operates. The company also pointed out inaccuracies in the Green Party/EFA report, including a claim regarding Spanish industrial property rights, stating that Spanish companies do not pay for these rights but rather generate profits from them.
Inditex further clarified that during the period referenced in the report, 2011 to 2015, it contributed over 4.4 billion euros (approximately 4.6 billion US dollars) in corporate income tax globally. For the fiscal year ending January 31, 2013, the company stated its European tax contribution alone exceeded its corporate income tax expenses, totaling 764 million euros (or 1 billion US dollars). These figures are presented by Inditex to demonstrate its significant tax contributions and counter the allegations of avoidance.
Amancio Ortega, the Spanish billionaire who controls Inditex and is recognized as one of Europe’s wealthiest individuals, oversees a company that reported 20.9 billion euros (22.1 billion US dollars) in sales last year. The Green Party/EFA is using the Inditex tax case to advocate for broader tax transparency within the European Union. They argue that citizens who purchase products from large corporations have the right to know if these companies are paying their fair share of taxes.
The Green Party/EFA emphasizes that “Public information about where companies employ people, where they declare profits and ultimately where they pay taxes is not a luxury, it’s a must.” Despite opposition from some EU member states concerned about tax transparency measures, the Green Party/EFA continues to push for greater financial accountability from multinational corporations like Inditex, particularly regarding the substantial sums, like the alleged 585 million euros, and their equivalent in currencies like US dollars, that are at the heart of such debates.
