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Crocs sells its chunky clogs to 150 million customers across 100 countries every year. But when tax season rolls around, the Broomfield, Colorado company has claimed that all of those global profits were actually earned in a two-person office in Malta, according to the New York Times.
Crocs isn’t the only one. Accounting giants KPMG, PwC, Deloitte and EY have been aggressively marketing similar strategies, and companies including LinkedIn, Abbott Laboratories, Victoria’s Secret, Kraft Heinz, PepsiCo and Skechers have all set up shell entities on the island. The number of Maltese subsidiaries created by U.S. companies has jumped nearly 70% over the past three years.
Why Malta? While its official corporate tax rate is 35%, companies can push that down to nearly zero through the right paperwork. The IRS has started challenging arrangements that lack real “economic substance,” and the EU has already taken legal action against Malta over a separate citizenship-selling scandal. For now, though, the loophole remains wide open, and Crocs’ shareholders aren’t complaining: the stock is up nearly 54% this year.