Brussels, 25/02/2015 (Agence Europe) - The coalition of European and American unions has accused the multinational of deliberately avoiding €1 billion in tax in the EU between 2009 and 2013. In 2009, the damning report on McDonald's explains, the American fast-food giant restructured its activities in such a way as to charge billions of euros in royalties for its European operations. Presenting the conclusions, the coalition of unions, working with the anti-poverty campaign War on Want, calls on the European Commission to include McDonald's in its investigations into potential state aid to multinationals, similarly to Amazon and Fiat Finance and Trade in Luxembourg, or Apple in Ireland.
McDonald's has set up a holding company in Luxembourg which owns the intellectual property of the group, McD Europe Franchising Sarl, flanked by a Swiss subsidiary, just after a change in policy in Luxembourg allowing companies to benefit from significant reductions in tax rates payable on income from intellectual property. The report states that in 2013, the taxation rate on the Luxembourg holding of McDonald's was as low as 1.4%. “This rate is significantly below those that appear to be available under the standard Luxembourg tax regime, even taking into account Luxembourg's generous tax rate of 5.8% on royalties and intellectual property income”, the report explains.
This suggests that these extremely low tax rates are likely to be the result of a preferential tax deal with Luxembourg, similar to those revealed by the LuxLeaks scandal. When invited to comment, the European Commission explained that as with the LuxLeaks documents, this report could be considered market information. However, it declined to state whether it was gathering information on the specific case of McDonald's. In December, it asked all the member states of the EU to submit a list of tax rulings granted between 2010 and 2013 (see EUROPE 11220).
Another practice McDonald's made use of was to transfer its European headquarters from the United Kingdom to Switzerland, but also to use intra-group royalty payments and transfer these to the Luxembourg subsidiary, even though this has no actual economic activity, the report argues. This holding has become one of the largest subsidiaries of McDonald's in Europe and received €3.7 billion in royalties between 2009 and 2013. However, the report goes on to reveal, in 2013, the holding and its branches in the United States and Switzerland paid just €3.3 million in tax.
The coalition calls on the countries of the EU to publish their tax rulings, particularly via a public register on tax rulings. The coalition of unions also supports the call by the Greens/EFA group to publish key information on tax paid by means of country-by-country reporting. Transparency International launched this appeal to the European Commission, which intends to look into the matter in March. The Greens/EFA group has pledged that the special committee on tax rulings will tackle the issue. (Translation from the original French version)