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article imageEU says McDonald's tax deals with Luxembourg legal

By AFP     Sep 19, 2018 in World

The European Union on Wednesday ended a long-running investigation into the tax arrangements between US fast food giant McDonald's and Luxembourg, finding the setup did not amount to illegal state aid.

"Luxembourg did not break EU state aid rules," EU Competition Commissioner Margrethe Vestager told a news briefing in Brussels.

With the decision, the maker of Big Mac and McNuggets escapes the fate of US giants Apple, Starbucks and Amazon, which were ordered by the EU to repay years of back taxes.

The case stemmed from a complaint by trade unions and the charity War on Want accusing McDonald's of avoiding around one billion euros ($1 billion) in taxes between 2009 and 2013 by shifting profits from one corporate division to another.

"Of course, the fact remains that McDonald's did not pay any taxes in Luxembourg on these profits -- and this is not how it should be from a tax fairness point of view," Vestager said.

But the commissioner said she welcomed that Luxembourg was in the process of closing tax loopholes related the EU's investigations.

These would "avoid such situations in the future," she said.

Specifically, the Commission investigated whether the arrangements meant McDonald's paid no tax in Luxembourg nor any dues to US authorities, under treaties between Washington and the duchy.

Launched in 2015, the case against one of the world's most iconic companies followed the LuxLeaks affair, which revealed that top global companies had negotiated lower tax rates, in some cases as low as one percent, in secret pacts with Luxembourg.

Reprieve for McDonald's comes after after iPhone-maker Apple was handed a record 14 billion-euro tax bill over its arrangements in Ireland.

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