Kraft said 200 employees would move from Vienna and London to a new regional head office in Opfikon, outside Zurich, beginning this summer. The move is expected to take a year to complete. The company has reportedly leased office space for 600 people at a research park near Switzerland’s largest airport.
“At the moment we have two European headquarters, and the aim is to have just one, in Zurich,” Kraft spokeswoman Sabine Peters-Halfbrodt told the Associated Press.
The US-based maker of such products as Ritz crackers, Toblerone chocolate bars and Oreos will join General Motors, Hewlett-Packard, Procter & Gamble and Pfizer in enjoying the tax advantages of having a regional headquarters in Switzerland. Nestlé, the world’s largest food and beverage company, is based in Vevey, near Lausanne.
Swiss cantons set their own corporate tax rates, to the ire of EU officials, who have watched with concern as a flood of foreign firms seek out regional headquarters outside the EU tax net. The EU argues that Swiss tax advantages violate the terms of a 1972 free trade agreement; Switzerland says the trade deal does not cover tax. In January, French lawmaker Arnaud Montebourg called for the EU to fight the tax “banditry” of low-tax Swiss cantons.
According to KPMG research, the average corporate tax rate in Switzerland, taking into account cantonal, municipal and federal taxes, is 21.3% compared with an EU average of 25.8%. In Zurich, the average rate is between 15% and 24% but foreign holding companies using Zurich as an administrative base are exempt from tax on their non-Swiss earnings. The UK’s headline corporate tax rate is 30%.
Zurich officials said Kraft would not receive any special tax breaks. Rather, they said, the company was attracted to Zurich because of its strategic location and excellent labour market.
Kraft confirmed there were other issues at play besides tax, with a spokesperson explaining: “What do you need for a corporate headquarters? It’s the ease of getting about: good transport to the airport, good rail links. We have a lot of expatriate staff so availability of schools and good quality accommodation are important.”
Kraft, the world’s second largest food and drinks company after Nestlé, is majority owned by Altria Group and had global revenues of about $34bn last year. Its global headquarters are in Northfield, Illinois, a suburb of Chicago.