The New York Times reports that the European Union regulatory division is looking into questionable tax practices by Starbucks, as well as other American firms. The highlight of the piece is the regulators’ contention that Starbucks’s roast technique wasn’t so much a recipe (and therefore intellectual property), as it was just a temperature instruction:
The Amsterdam coffee roasting business began to send large royalty payments to Alki for use of the bean roasting recipe, which the commission said on Wednesday appeared vastly inflated for what it was. The recipe was basically the temperature for roasting beans, and appeared to be more like instructions than intellectual property. Yet counting it as such allowed Starbucks’ roasting unit to reallocate most of its profit to Alki in the form of royalties, the commission said, nearly wiping out the Dutch tax bill.
I always find it entertaining when regulatory or advisory bodies issue financial and culinary opinions in one breath, much like Starboard Capital’s 2014 recommendation to Olive Garden that it reduce costs and increase the salt in its pasta.
As for me, I’m just waiting for a recipe for International Monetary Fund pizza. Hold the anchovies.
Disclosure: I hold shares of Starbucks.
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