Diageo turns down offer to relocate to Switzerland

04/02/2010

Drinks giant Diageo has been offered the chance to relocate its offices to Switzerland to improve its tax bills and those of its top executives.

The offer would exempt the company’s top 200 executives from paying any income tax. However, the offer has been rejected by Diageo.

The offer from the Swiss illustrates the lengths to which foreign jurisdictions will go to lure UK companies to relocate their offices. Friendlier tax environments are aware that UK firms are struggling to swim against a rising tide of tax hikes imposed by the government. These include the 50 per cent tax level imposed on the country’s highest earners.

Many firms have already made the move abroad to take advantage of lower corporate tax levels - indeed, the offer from the Swiss would have resulted in Diageo paying far less corporation tax than it does currently.

Despite the generous offer, Diageo has rebuffed the Swiss in their attempts to prompt a relocation of its company registration. Diageo’s spokesperson stated that the firm continues to see "many advantages of remaining a British-domiciled company.” However, he added that the British government does need to concentrate on making the UK more competitive for business.