Shein's elaborate financial scheme to pay paltry taxes in France

© Kaspars Grinvalds/Shutterstock.com

Shein, the Chinese fast fashion giant, is once again under fire. This time, it is not allegations concerning its environmental impact or its working conditions, but its tax practices that are being denounced.

France, Ireland, Singapore, Cayman Islands

According to a survey by l’Informé, the company has developed a tax optimization strategy bordering on legality in order to pay a minimal amount of taxes within France. A conclusive choice: in 2023, its French subsidiary would have paid only 273,000 euros having declared a turnover of 9.9 million euros. If we take into account its sales, this is estimated at between 1.1 and 1.6 billion euros.

Because in reality, Shein's French structure only employs around twenty people and its revenues do not come from sales on French territory, but from marketing services for its parent company in Ireland. As a reminder, technology giants tend to set up their headquarters in the country, where the tax policy is much more advantageous. The tax rate applied to profits is 12.5%, compared to 25% in France.

The revenue generated by Shein's applications in France is invoiced in Ireland, via a company called Infinite Styles Commerce. And the latter plays a central role in the arrangement. Its profits are allegedly transferred to a holding company in Singapore where they are taxed at 17%.

200% Deposit Bonus up to €3,000 180% First Deposit Bonus up to $20,000

Worse still, they are subsequently transferred to the parent company Elite Depot Ltd, strategically located in the Cayman Islands, a very famous tax haven. This explains why; in 2023, Infinite Styles Commerce generated a turnover of 7.7 billion euros with a strangely low margin, located at 1.6%

© Presse-citron

Shein denies any illegal practice

In a right of reply shared with our colleagues at Clubic, the e-commerce giant denies any illegal practice. ” Our operations in France are fully compliant with tax laws, and we pay all taxes and duties owed to the French government, including VAT, both for our operations in the territory and for our sales in the French market ,” it said, specifying that “ tax is paid in accordance with the regulations of the various jurisdictions in which Shein operates. It is therefore incorrect to assess Shein’s tax contribution in France by limiting ourselves to the accounts of a single local entity, without taking into account cross-border sales tax payments and other international tax obligations .”

This is not the first time that Shein has found itself at the center of a controversy. Moreover, the company, as well as its Chinese rival Temu, is directly targeted by a French law against fast fashion.

• Shein allegedly developed a sophisticated tax optimization plan to avoid paying a lot of taxes in France.
• It includes subsidiaries of the company located in Ireland, Singapore and the Cayman Islands.
• In a right of reply, Shein denies any illegal practice.

📍 To not miss any news from Presse-citron, follow us on Google News and WhatsApp.

[ ]