ECCO Group - Tax Strategy - 2024
Introduction
The ECCO Group was founded in 1963 by Birte and Karl Toosbuy. The headquarters of the ECCO Group is located in the town of Bredebro in south-western Denmark.
The ECCO business model is rather unique within the shoe industry, as ECCO owns and operates the entire value chain from “cow to customer”. The Group operates in most segments of the footwear market (Men’s, Women’s, and Kids’) and in selected segments of the sports shoe market (namely Golf, Outdoor, and Walking).
Sales of ECCO products are conducted in approximately 2,200 shops around the world and are handled by a mix of ECCO owned subsidiaries, joint ventures, and third-party distributors. Sales are made through a mix of sales channels such as wholesale, retail and e-commerce.
It is part of ECCO’s code of conduct that “ECCO will only achieve long-term business success by demonstrating good corporate citizenship...” This is seen through ECCO’s general approach to tax, which is 100% commitment to tax compliance wherever ECCO operates. ECCO considers its tax payments a contribution to the communities in which it operates, as part of its social value creation.
Risk management and governance arrangements
The management of the daily tax matters is administered by Group Tax at ECCO headquarters. Group Tax reports to the VP of Group Tax, who together with the Managing Board is responsible for the tax strategy and management of the tax risks for the ECCO Group.
It is the responsibility of Group Tax to ensure that ECCO is compliant in all tax matters, but also that ECCO’s business is conducted in the most tax-efficient manner for instance in order to avoid double taxation. Group Tax seeks to be compliant with tax legislation by making sure that ECCO meets relevant deadlines in regards to payment and filing.
Tax planning
ECCO’s objective is to be compliant with all relevant tax legislation. The overall approach is to support the commercial needs of the business in the most tax-efficient manner, but at the same time be compliant with all relevant laws and take into account all stakeholders’ interests. The strategy is to pay the correct amount of tax, at the right time.
ECCO products are sold in 93 countries, globally. ECCO never uses tax havens (low or nil tax jurisdictions) to avoid taxes. ECCO’s business structures are always driven by commercial considerations alone. In 2017, ECCO entered the Latin American market, by opening its first store in Panama. Panama is part of the EU List of Non-cooperative tax jurisdictions, but ECCO’s presence is purely commercial.
ECCO is aware that all business decisions are affected by tax and tax risks. Consequently, ECCO seeks to make tax compliance part of the decision-making process, and hereby try to avoid any tax disputes or risks in the future. E.g. where relevant, ECCO will enter into advance pricing agreements (APAs) to mitigate tax risks.
Attitude towards risk
ECCO is not involved in aggressive tax planning, but rather takes a conservative approach. The Group will choose the most tax-efficient approach, but always in compliance with the relevant legislations. The tax strategy takes into account relevant stakeholders’ interests.
ECCO realises that tax compliance is increasingly complex and therefore, ECCO tries to act in a proactive way to ensure that all taxes are paid in due time and according to the legislation in the countries where ECCO operates. The attitude towards tax risk is low and this is why ECCO seeks to be compliant in all tax matters. To mitigate the risk in the best possible way, ECCO follows the OECD guidelines and the arm’s length principle in its price setting of all transactions.
Working with Tax Authorities
From ECCO’s Code of Conduct: “No matter where in the world ECCO operates, this is done according to a set of principles which stipulate that we will behave in a correct and decent manner. This is our heritage as a Danish company.”
To meet this intent, ECCO’s focus is to provide tax authorities worldwide (i.e. HRMC, IRS, and SKAT) with timely tax compliance. Also it is the objective of ECCO Group Tax to seek an open and constructive dialogue with all tax authorities in a transparent way.
As per council directive (EU) 2016/881, ECCO annually files a Country-by-Country report to the Danish Tax Authorities, which is automatically exchanged in accordance with the multilateral competent authority agreement for exchanges under Double Tax Conventions or Tax Information Exchange Agreements.
ECCO wishes to work with tax authorities in a proactive way, to minimize the risk of disputes.
End note
ECCO regards the publication of this tax strategy as complying with the duty under United Kingdom legislation, paragraph 16(2) of Schedule 19 of the Finance Act 2016 to publish the Group tax strategy in the current financial year (2023).