EU says McDonald's, Luxembourg tax deal not illegal

McDonald’s tax deal with Luxembourg did not breach EU state aid rules, EU antitrust regulators ruled on Wednesday - saying the reason the U.S. fast food chain did not pay some taxes was due to the mismatch between U.S. and Luxembourg laws.

The decision by the European Commission came after a three-year long investigation, part of its crackdown against illegal sweetheart deals between EU governments and multinationals that has resulted in Apple, Starbucks, and Fiat paying billions of euros in back taxes.

The investigation had focused on McDonald’s Luxembourg-based subsidiary Europe Franchising which receives royalties from franchisees in Europe, Ukraine and Russia.

Luxembourg in a 2009 tax ruling said the company did not have to pay corporate taxes as its profits would be taxed in the United States. In a second tax ruling, the Grand Duchy said that the company was no longer required to prove that its royalty income was subject to U.S. taxation.

“Of course, the fact remains that McDonald’s did not pay any taxes on these profits – and this is not how it should be from a tax fairness point of view,” European Competition Commissioner Margrethe Vestager said.

At: https://www.reuters.com/article/us-eu-mcdonald-s-corp-subsidies/eu-says-mcdonalds-luxembourg-tax-deal-not-illegal-idUSKCN1LZ16W