"McDonald's has saved 1.05 billion euro in taxes on its European activities thanks to fiscal optimization techniques", is what 3 different European trade unions have said.
Hamburger chain uses Luxembourg
The three unions (EPSU, EFFAT and SEIU) have calculated that McDonald's has diverted 3.7 billion euro of its European income towards McD Europe Franchising, which is based in Luxembourg and only paid 16 million euro in taxes in the 2009-2013 period. Had the income been taxed in the countries where it had generated the income and profits, the chain would have had to pay 1.05 billion euro in additional taxes.
The hamburger chain apparently pays 5 (fully deductible) % of its turnover in taxes towards the Luxembourg company and in return it can use the brand name and organizational formula. This particular type of income is taxed very advantageously in Luxembourg and that is why McD Europe Franchising was founded in 2009, immediately after the law was changed.
This "tax avoidance" is mainly targeted towards countries where the chain has huge turnovers: France (4.416 billion euro), Germany (3.619 billion euro), the United Kingdom (2.75 billion euro). The American fast food chain has defended its actions and has said it is full within the boundaries of the law.
The employees' representatives have asked the European Commission to investigate McDonald's fiscal moves. Allegedly, the European Commission has already launched 4 separate investigations into special tax regimes in Luxembourg, the Netherlands, Ireland and Belgium. The results for the first three investigations should be revealed in the second quarter.