Europe investigates McDonald's tax deals

Europe investigates McDonald's tax deals

Europe will investigate the fiscal advantages McDonald's has been given in Luxembourg and if it considers these are actually illegal state support, then the American fast food chain risks having to pay millions still.

No royalty tax

Europe's focus is mostly on the Luxembourg ruling which means McDonald's has been given a favourable situation regarding its royalties. Ever since 2009, all European and Russian franchisees have had to pay royalties to a Luxembourg subsidiary in order to be able to use the brand. It allowed McDonald's to draw away money from other countries, lowering its taxes over there, while it did not have to pay any royalty taxes in Luxembourg either.

 

The reasoning behind the ruling is that McDonald's already pays taxes in the United States, which meant it could be exempt of these additional taxes. European researchers have wiped that reasoning off the table, especially because the company did not have to pay any royalty taxes in the United States at the time of the ruling. European commissioner Margrethe Vestager says tax treaties are meant to avoid paying profit taxes twice, not to avoid paying taxes at all.

 

Not the first

McDonald's is not the first company to come under fire, as the European Union has already forced Luxembourg to get 20 million euro in additional taxes from Italian car manufacturer Fiat, similarly to what the Netherlands will have to do with coffee chain Starbucks. Other well-known cases are Luxembourg-Amazon and Ireland-Apple.

 

It was revealed last year that Luxembourg had given more than 340 companies specific rulings, which led to the name LuxLeaks.

 

Questions or comments? Please feel free to contact the editors


Zalando's growth once again surpasses 20 %

10/08/2017

German Zalando has achieved its 20 % growth target for the second quarter, but just barely. It still forecasts a 20 to 25 % growth for its full fiscal year.

Gucci files lawsuit against Forever 21

09/08/2017

Fashion label Gucci has decided to file a lawsuit against fashion chain Forever 21 in the United States. The case revolves around several pieces of clothing, all with a blue-red-blue or green-red-green ribbon. 

Ralph Lauren outperforms expectations

08/08/2017

Fashion label Ralph Lauren’s first quarter was a very good one, as it beat both analysts’ turnover and profit forecasts. It is quite a turnaround for a company that suffered a huge loss only a year ago.

Difficult first quarter for New Look

08/08/2017

British fashion chain New Look’s past quarter was disappointing with a 4 % turnover drop. Its adjusted EBITDA fared much worse, with a 35 % drop.

ING forced to pay Foot Locker compensation

07/08/2017

Dutch ING Bank will have to pay the Dutch and European Foot Locker branches 300,000 euro in damages. A court decided the fee after Foot Locker was scammed for 1.8 million euro in 2015.

Asics opens its largest store yet in London

04/08/2017

Sports brand Asics opened a new flagship store in London, which is also its largest store in the world. Located in Regent Street, the store will bring together its four labels for the first time ever.

Back to top