McDonald’s protests its innocence as investigation opens into ’$1bn tax dodge’

McDonald’s is the latest multi-national company to face an EU inquiry into its tax arrangements. The fast-food chain’s activities in Luxembourg are to come under scrutiny from competition regulators to see if it has been receiving unlawful state aid. It has been accused by campaigners of sidestepping about €1bn in tax over four years by channelling revenues from its restaurants through a division based in the country.

Its preliminary view is that a tax ruling granted by Luxembourg may have granted McDonald’s an advantageous tax treatment in breach of EU State aid rules

European Commission statement

The decision to investigate was confirmed by European Competition Commissioner Margrethe Vestager, who has already found against Fiat Chrysler’s tax arrangements in the Netherlands and Luxembourg’s dealings with Starbucks. In both cases, the companies were ordered to pay up to €30m in backdated taxes. However, McDonald’s defended its record saying it had paid billions of euros in tax across the EU. It added: “Our independent franchisees, who own and operate approximately 75% of our restaurants in Europe, also pay corporate tax and many other taxes.”

From 2010-2014, the McDonald’s companies paid more than $2.1bn (€2bn) just in corporate taxes in the European Union, with an average tax rate of almost 27%.

McDonald’s statement

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