McDonalds Investigated for EU Tax Evasion

December 16, 2015

According to USA Today, European regulators are investigating McDonald’s to determine if McDonald’s was given an unfair tax advantage by Luxembourg in breach of European Union state aid rules. US and European labor groups joined anti-poverty organization War on Want in issuing a report last February accusing McDonald’s of deliberately avoiding more than $1 billion in European corporate taxes from 2009 to 2013. The report contends that the company channeled royalty payments in a small Luxembourg-based subsidiary with a Swiss branch. The Luxembourg entity registered cumulative revenue of more than $3.2 billion during that period, yet paid only $16.9 million in taxes.

“For too long, McDonald’s has stashed billions in tax havens and ducked contributing to state coffers while simultaneously imposing poverty wages on its workers. McDonald’s has a clear record of mistreating workers and communities virtually everywhere it operates, and it’s time that the company be held accountable,” said Scott Courtney, organizing director of the Service Employees International Union (SEIU).

“The purpose of double taxation treaties between countries is to avoid double taxation—not to justify nontaxation,” says Margrethe Vestager, the European Commission’s competition commissioner. The EU has been cracking down on sweetheart tax deals for US multinational corporations and has also recently looked into the tax affairs of Apple, Amazon, Starbucks, and Fiat Chrysler Automobiles.