Adidas, one of the largest and most recognisable sportswear companies in the world, is suspected of tax evasion and had its offices raided by investigators on the evening of December 10.
These raids happened in light of the European Public Prosecutor’s Office (EPPO) suspecting the brand of evading customs duties and import sales tax.
In a press release on December 11, the EPPO said it “carried out evidence collecting activities in Germany and Austria”, due to its tax evasion suspicions.
“These investigative measures come in the wake of a criminal investigation led by the EPPO, in cooperation with the Munich Customs Investigation Office (Zollfahndungsamt München).
“It is suspected that a corporate group trading in sportswear was involved in the evasion of import duties to the detriment of the EU budget.”
The EPPO added that no further information can be made public at this stage of the investigation.
Reacting to the German Manager Magazin, Adidas confirmed the company’s headquarters in Herzogenaurach and other locations such as the plant in Scheinfeld in Franconia and the logistics centre in Rieste near Osnabrück had been searched.
A spokeswoman said the issue was about “compliance with customs and tax regulations when importing products into Germany”.
“Adidas cooperates with the authorities and provides the necessary documents and information.”
She added that the dispute spans from October 2019 to August 2024.
According to Addidas, it is also about “different interpretations of German and European law”.
Adidas relies heavily on global manufacturing, with Vietnam (38 per cent), Indonesia (32 per cent), and China (14 per cent) serving as the largest producers of its footwear as of 2023. For apparel, Cambodia (23 per cent), Vietnam (20per cent), and China (15per cent) are the leading production hubs.
Most of its German factories were closed in the 1990s, moving production to Asia for ‘cost-effectiveness’.
It experimented with high-tech “Speedfactories” in Germany and the US but ultimately closed them in 2019, choosing to deploy the technology in Asia instead.
The multinational is not expected to feel “significant financial effects” from the EPPO’s investigation.
Adidas has revised its guidance upward three times in 2024, reflecting strong performance. In its most recent quarter, the company reported sales of €6.44 billion, up from €5.99 billion in the same quarter the previous year.
In the summer of 2023, it was announced that Adidas was in conflict with the South African Revenue Service (SARS) over R1.9 billion (around €100 million) the tax authority claims it is owed for underpaying customs duties.
