Irish Kellogg unit pays zero tax from €1.3bn of European sales

Irish KET entity makes operating profit but intra-group loans push it into the red

Kellogg’s cereals on display.  Kellogg uses a  global network of companies to minimise its corporation tax bills

Kellogg’s cereals on display. Kellogg uses a global network of companies to minimise its corporation tax bills

 

Breakfast cereal company Kellogg last year routed €1.3 billion of sales from the UK and other parts of Europe through an Irish unit.

However, Dublin-registered Kellogg Europe Trading (KET), which is owned by a Luxembourg entity, paid no corporation tax here because its profits were wiped out by loans to another group company.

KET made an operating profit but the company was pushed into the red by the interest on the €1.7 billion loans, and it ended up making a loss of €87.5 million. Newly-filed financial statements show KET is charged interest rates of up to 8.75 per cent by other entities in the Kellogg empire, which keep it loss- making. A note to the accounts highlight that, while the company is profitable, “the loss is created by interest incurred on the loans from fellow group undertakings”.

Using tax-planning strategies similar to those of the biggest technology companies, Kellogg uses a complex global network of companies to minimise its corporation tax bills. The company last night highlighted that its Irish companies have substantial operations here.

“Kellogg’s European cereal category has been led from Dublin since 2005. We employ approximately 250 people in Ireland including the head of our European cereal business unit and a number of senior cereal functional leaders for Europe,” the company said.

“KET pays tax at the corporate rate set by the Irish government,” it added.

KET reduced its losses in 2014 with a deferred tax asset of €13 million. The company has moved about €8.5 billion of foreign sales through KET in the last six years but paid a minuscule amount of tax due to the interest on the group loans.