A coalition of European and American trade unions, joined by the anti-poverty campaign group War on Want, released a report February 24 claiming that McDonald’s avoided over €1 billion (USD 1.1 billion) in European corporate taxes from 2009-2013 by shifting income from its European franchises to a Luxembourg subsidiary through use of royalty payments.
The group said that McDonald’s restructured in 2008 and 2009, transferring its European intellectual property and franchising rights to McD Europe Franchising Sàrl, a Luxembourg-resident subsidiary with branches in both Switzerland and the US. McDonald’s also moved its European headquarters from London to Geneva. During the five year period from 2009 to 2013, over €3.7 billion (USD 4.1 billion) in royalties were paid to the Luxembourg entity.
According to the report, in 2013 the Luxembourg company and its branches paid only €3.3 million (USD 3.7 million) in taxes despite receiving €833.8 million (USD 933.3 million) in royalties that year. In 2013, Luxembourg’s cut of the taxes was an “astonishingly low” €3,235 (USD 3,621), the report said.
“McDonald’s has engaged in aggressive and potentially abusive optimisation of its structure which appears to have led to the avoidance of significant amounts of tax,” the group said.
It called on the European Commission to investigate EU states where the company operates for state aid violations and said European tax authorities should investigate the company’s dealings, as well.
The group called for public disclosure of secret tax rulings, mandatory public country-by-country reporting for multinationals, and a public registry of company structures.
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