EU Hits McDonald's With Full-Blown Tax Investigation
December 03 2015 - 7:30AM
Dow Jones News
BRUSSELS—European Union regulators confirmed Thursday they have
opened a full-blown probe into McDonald's Corp.'s tax affairs in
Luxembourg, warning that a tax deal granted to the fast-food chain
in 2009 may have reduced its tax burden in violation of EU law.
The move embroils a fourth U.S. multinational in a widening tax
investigation that is a priority for policy makers in Brussels, but
has drawn criticism from the U.S. government.
The European Commission, the bloc's top antitrust regulator,
said it would examine whether a 2009 tax ruling granted to
McDonald's Europe Franchising, a Luxembourg unit that collects
royalty fees from restaurants in Europe and Russia, had departed
from national tax laws.
The commission's preliminary view is that the tax ruling "may
have granted McDonald's an advantageous tax treatment in breach of
EU state-aid rules," it said.
"McDonald's Europe Franchising has virtually not paid any
corporate tax in Luxembourg nor in the U.S. on its profits since
2009," the commission said in a statement.
The EU has been examining whether companies including Amazon.com
Inc. and Apple Inc. have benefited from illegal tax deals in Europe
that allegedly shift profits from one corporate division to another
to avoid tax.
The EU's antitrust chief Margrethe Vestager said the McDonald's
ruling "has to be looked at very carefully."
"The purpose of double-taxation treaties between countries is to
avoid double taxation—not to justify double non-taxation," Ms,
Vestager said.
The commission will now carry out a full-blown investigation to
establish whether its preliminary view is correct. If so,
McDonald's could face sizable demands for back taxes.
The latest probe follows a report earlier this year by U.S. and
European trade unions claiming that McDonald's had avoided about €1
billion ($1.06 billion) in taxes between 2009 and 2013 by funneling
royalties to Luxembourg. According to the report, the company
underpaid around €194 million of taxes in Luxembourg over the same
period.
Over the past 18 months, the EU has opened formal investigations
into tax deals struck by Amazon and Fiat Chrysler Automobiles NV in
Luxembourg, Apple in Ireland and Starbucks Corp. in the
Netherlands, as well as a Belgian tax discount plan that has
benefited Anheuser-Busch InBev NV and a number of other
Belgian-based multinationals.
All of the governments involved have denied giving special
treatment, and the companies have denied receiving it.
Two of those probes were closed in October, when the EU ruled
that Starbucks and Fiat had benefited from illegal tax deals.
Write to Tom Fairless at tom.fairless@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
December 03, 2015 07:15 ET (12:15 GMT)
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