The European Commission has opened an investigation into McDonald’s tax deals with Luxembourg.
The European Commission says the deals allowed McDonald’s to avoid paying taxes in both Luxembourg and the US on royalties from Europe and Russia.
It said the two rulings by the Luxembourg authorities in 2009 had allowed McDonald’s Europe Franchising to pay no corporation tax in Luxembourg since then.
Commissioner Margrethe Vestager, in charge of EU competition policy, said: “A tax ruling that agrees to McDonald’s paying no tax on their European royalties either in Luxembourg or in the US has to be looked at very carefully under EU state aid rules.
“The purpose of double-taxation treaties between countries is to avoid double taxation - not to justify double non-taxation.”
A McDonald’s spokesperson said: “McDonald’s complies with all tax laws and rules in Europe and pays a significant amount of corporate income tax. In fact, from 2010-14, the McDonald’s companies paid more than $2.1bn just in corporate taxes in the European Union, with an average tax rate of almost 27%.
“Additionally, we pay social, real estate and other taxes. Our independent franchisees, who own and operate approximately 75% of our restaurants in Europe, also pay corporate tax and many other taxes.
“We are confident that the inquiry will be resolved favourably.”
