McDonald’s Investigated for European Tax Evasion
The U.S. multinational will likely be investigated for evading taxes with Luxembourg’s help, following a report by trade unions earlier this year.
McDonald’s is under investigation by European Union regulators for illegal tax deals with Luxembourg, according to sources close to the inquiry.
The multinational—joining a list of EU tax probes against U.S. giants that includes Microsoft, Apple, Amazon, Starbucks and Fiat Chrysler—was reported earlier this year by trade unions to have dodged 1 billion euros (US$1.06 billion) in taxes between 2009 and 2013 by directing revenue through Luxembourg.
The details of the investigation will be announced Thursday, and could result in McDonald’s paying back evaded taxes in a case similar to the decision against Starbucks and Fiat Chrysler in October. It may also be denied state aid if found to have breached the law, most likely in the form of private tax assurances in exchange for investment and jobs.
McDonald’s has already been on the EU’s radar after the European Commission looked into the firm’s tax agreements in Luxembourg last year. French fiscal authorities also probed its French offices in 2014, while Brussels launched a new inspection in March following the report by the trade unions.
Luxembourg also drew the attention of regulators last year when the ‘LuxLeaks’ revealed that hundreds of companies were benefiting from government tax deals brokered by PricewaterhouseCoopers. The small country has attracted big business for its favorable tax laws, largely set up by presiding EC President Jean-Claude Juncker.
The fast-food chain’s spokesperson said it had not evaded taxes and had not yet been notified about the investigation. Its corporate taxes in the EU amounted to more than 2.1 billion euros from 2010 to 2014, a company spokesperson said.
The U.S. Senate convened on Tuesday to discuss the recent financial investigations in Europe, with the U.S. Treasury claiming that the Commission is “disproportionately targeting U.S. companies.”