McDonald’s may have to pay nearly $500m in back tax

European Commission investigating tax the fast food company pays in Luxembourg HQ

As with the investigation into the tax paid by Apple in Ireland, Brussels is looking into McDonald’s. Amazon is also in line for investigation. Photograph: Matt Kavanagh

As with the investigation into the tax paid by Apple in Ireland, Brussels is looking into McDonald’s. Amazon is also in line for investigation. Photograph: Matt Kavanagh

 

Fast food restaurant McDonald’s could face an order to pay nearly $500 million (€448 m) in back taxes to Luxembourg, according to a Financial Times analysis of an investigation by Brussels into state-supported tax avoidance.

Last month the European Commission imposed a €13 billion tax penalty on Apple in Ireland, triggering a storm of protest from Washington and corporate America. As the commission steps up its crackdown on so-called sweetheart tax deals, two US multinationals – McDonald’s and Amazon – are potentially next in line.

According to a review of the commission’s McDonald’s probe, the company paid an average tax of 1.49 per cent on the $1.8 billion profit earned by its Luxembourg-based European headquarters since its 2009 reorganisation.

The fast-food chain is under investigation by Brussels over a tax ruling underpinning its European structure, which permitted McDonald’s to pay no corporation tax – either in the US or Luxembourg – on royalty income from restaurant franchises across Europe. Luxembourg and McDonald’s deny any wrongdoing.

If the standard Luxembourg tax rate of 29.2 per cent applied to those earnings – following the broad principles the commission applied in the Apple case – McDonald’s would owe the Grand Duchy nearly half a billion dollars.

– Copyright The Financial Times Limited 2016