Ikea's corporate structure is insanely complicated. It is technically owned by a Dutch charitable nonprofit -- a strategy that allows the group to pay 3.5% tax on annual profits of €553m. However, the charity itself appears to do almost no charitable giving. Most of the money disappears into generic line-items like "other operating charges" which it refuses to explain. 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.
In other words, INGKA is a charitable organization that is bigger than Bill Gates, except that if you were to judge charitable organizations, Gates would win hands down...The only stated purpose of INGKA is "innovation in the field of architectural and interior design" and to make a show at the sham of dedication to this noble aim, they make a grant of 3.7 million dollars a year to a Swedish University.
INGKA is now worth 36 Billion Dollars and in the murky world of accountability of Netherlands based charitable organizations, the Kamprad family can dissolve INGKA and sieze the assets after Ingmars death.
Perhaps the next time you are assembling your new IKEA folding couch bed, you will understand why the directions are so damn complicated!