Kraft Foods Looks to Reduce Tax Bill With Cadbury Move
Kraft Foods plans to move part of its recently acquired Cadbury business to its European headquarters in Zurich, Switzerland in order to reduce its corporation tax exposure. Since 2006 Kraft Foods has been implementing a European model involving a (holding) company based in Zurich together with local companies in country markets.
Cadbury, which was acquired for $18.4b earlier this year, is now being integrated into this model. This involves the transfer of certain roles to Switzerland, though the majority of UK-based roles will remain in Britain.
Corporation tax on Kraft’s Zurich-based business starts at 15% compared to the much higher rate of 28% in the UK. Foreign holding companies based in Zurich can be exempt from tax on non-Swiss earnings and can also apply for ‘mixed company tax privilege’ to gain lower rates.
