Giovanni Ferrero, family head of the Italian chocolate empire that makes Kinder Surprise, Nutella and Ferrero Rocher, is paying himself and his family a €642m (£542m) dividend in one of Europe’s biggest-ever paydays. Giovanni Ferrero approved the huge dividend after the company made record profits of €928m last year. The dividend is paid to the Ferrero family’s private wealth management office FEDESA in Monaco.
The huge annual dividend payment comes as the company paid just £110,000 tax in the UK last year, despite selling £419m worth of chocolates and other snacks in Britain.
Ferrero, who is Italy’s richest man and the world’s 27th-wealthiest with a €29bn (£24bn) fortune, has paid himself and his family more than €2bn in dividends over the past decade. Over the same period the company, which also owns TicTacs and the UK’s 109-year-old chocolate brand Thornton’s, paid less than £500,000 in UK taxes. Ferrero Group is entirely owned by the Ferrero family, but the company declined to state how much of the firm is owned by each family member. The dividend payments have lifted the family up the global wealth rankings, and in 2008 they overtook the family of media tycoon and former prime minister Silvio Berlusconi to become Italy’s richest family. Berlusconi has fallen to the fourth-richest Italian with a €7.4bn fortune.
Tax experts have accused the company of structuring the business in a “complex manner” in order to pay as little tax as possible. Last year the UK business paid a £334m “cost of sales” charge to Ferrero’s holding company in low-tax Luxembourg. That led to the company making a pre-tax profit of just £9.7m , and the firm paid UK taxes of just £110,000. Ferrero UK said it had lost so much money in the UK over the years that it had stored up “unused tax losses of £22.5m available for offset against future profits”.
Robert Leach, a tax accountant, said: “Ferrero Rocher appears to be shifting its profits overseas to reduce its UK tax liability. The company is shifting the profits to Luxembourg, and shifting that to Monaco – where there are no taxes.
The UK company accounts show that Ferrero has not broken even for many years. No parent company would keep a loss-making company going year after year, the fact that Ferrero Group is doing so is in effect an admission that it is exporting profits. Basically, this is chocolate and hazelnut wrapped in some fancy packaging – it should not cost much to make. So I would ask the company, what is costing £334m? I would ask Giovanni Ferrero, ‘Why are you still selling chocolate in the UK, when you don’t make a profit?’ ”