IKEA

In preparing for an article I came across this information about my beloved friend IKEA on Wikipedia. I think that you will find it interesting.

Despite its Swedish roots, IKEA is owned and operated by a complicated array of not-for-profit and for-profit corporations. The IKEA corporate structure is divided into two main parts: operations and franchising. Most of IKEA’s operations are overseen by Ingka Holding, a private, for-profit Dutch company. Of the IKEA stores in 36 countries, 235 are run by the INGKA Holding. INGKA Holding is not an independent company. It is wholly owned by the Stichting Ingka Foundation, which Ingvar Kamprad established in 1982 in the Netherlands as a tax-exempt, not-for-profit foundation. The Ingka Foundation is controlled by a five-member executive committee that is chaired by Kamprad and includes his wife and attorney.

While most IKEA stores operate under the direct purview of Ingka Holding and the Ingka Foundation, the IKEA trademark and concept is owned by an entirely separate Dutch company, Inter IKEA Systems. Every IKEA store, including those run by Ingka Holding, pays a franchise fee of 3% of the revenue to Inter IKEA Systems. The ownership of Inter IKEA Systems is exceedingly complicated and, ultimately, unknown for certain. Put simply, Inter IKEA Systems is owned by Inter IKEA Holding, a company registered in Luxembourg. Inter IKEA Holding, in turn, belongs to an identically named company in the Netherlands Antilles that is run by a trust company based in Curaçao. The owners of this trust company are unknown (IKEA refuses to identify them) but are assumed to be members of the Kamprad family.

In 2004, the last year that the INGKA Holding group filed accounts, the company reported profits of €1.4 billion on sales of €12.8 billion, a margin of nearly 11 percent. Because INGKA Holding is owned by the nonprofit INGKA Foundation, none of this profit is taxed. The foundation’s nonprofit status also means that the Kamprad family cannot reap these profits directly, but the Kamprads do collect a portion of IKEA sales profits through the franchising relationship between INGKA Holding and Inter IKEA Systems. Inter IKEA Systems collected €631 million of franchise fees in 2004, but reported pre-tax profits of only €225 million in 2004. One of the major pre-tax expenses that Inter IKEA systems reported was €590 million of “other operating charges.” IKEA has refused to explain these charges, but Inter IKEA Systems appears to make large payments to I.I. Holding, another Luxembourg-registered group that, according to The Economist, “is almost certain to be controlled by the Kamprad family”. I.I. Holding made a profit of €328 million in 2004.

In 2004, the Inter IKEA group of companies and I.I. Holding reported combined profits of €553m and paid €19m in taxes, or approximately 3.5 percent. The Berne Declaration, a non-profit organization in Switzerland that promotes corporate responsibility, has formally criticized IKEA for its tax avoidance strategies. In 2007, the Berne Declaration nominated IKEA for one of its Public Eye “awards,” which highlight corporate irresponsibility and are announced during the World Economic Forum in Davos, Switzerland.

Along with helping IKEA make non-taxable profit, IKEA’s complicated corporate structure allows Kamprad to maintain tight control over the operations of Ingka Holding, and thus the operation of most IKEA stores. The Ingka Foundation’s five-person executive committee is chaired by Kamprad. The INGKA Foundation is officially dedicated to promoting “innovations in architecture and interior design”. With an estimated net worth of $36 billion, the foundation is unofficially the world’s largest charitable organization, beating out the much better known Bill and Melinda Gates Foundation, which has a net worth of approximately $33 billion. Despite its enormous wealth, the Ingka Foundation does very little charitable giving. Detailed information about its grantmaking is unavailable, as foundations in the Netherlands are not required to publish their records. But IKEA has reported that in 2004-2005, the Ingka Foundation’s donations were concentrated on the Lund Institute of Technology in Sweden, and the Lund Institute reported the receipt of $1.7 million grants from the foundation during both of those years. By way of comparison, the Gates Foundation made gifts of more than $1.5 billion in 2005.

IKEA ‘where america shops for good design’. funny or cynical on my part?

Ingvar Kamprad is one of the top 10 billionaires according to Forbes and IKEA is an acronym for his name and the place where he lived as a kid.

who’s the article for?

The article I am working on is for E Magazine.

me, i like ikea, and i thoroughly enjoyed stockholm, sweden. I also noticed how many of the place names in the stockholm subway system echoed ikea product names ;p

its ironic that north american city dwellers move each year where the IKEA furniture they purchase does not last a move… and who said consumerism is so american? Throw it away and buy some more… it ships flat and its so easy to put together. And its fun.

Maybe in 100 years that ‘buy and toss’ mentality will be a crime punishable by being a garbage collector for a year.

you’re assuming a) that I’m not a legal resident of the USA and b) that we haven’t met ;p

In parts of New England (and probably other areas) there are towns that require you to pay for each garbage bag that you put out at the curb in order to encourage recycling. The bags are sold by the towns I think.

I think many Midwestern cities do that too, there is a limit on the number of bags you can put out. Many people get around that by finding an apartment complex and tossing their trash there.

As for ikea, the only thing they are guilty off, like it or not, is having good accounting and legal departments. They probably aren’t “getting away” with anything, just pretty slick with the bureaucracy. Has this guy built IKEA during his lifetime?
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