Luxembourg to investigate claims McDonald’s avoided $1 billion in tax
Officials say they are examining allegations, made by trade unions, that fast-food giant exploited controversial tax loophole in Luxembourg.
The European Union is investigating claims that McDonald’s avoided more than €1bn ($1.1bn) in tax by exploiting a controversial royalties loophole through Luxembourg.
The European Union competition commissioner Margrethe Vestager said on Tuesday that she was examining claims, made by trade unions, that McDonald’s paid just €16m of tax on royalties worth €3.7bn between 2009 and 2013.
“We are looking into the information gained by trade unions when it comes to McDonald’s in order to assess if there is a case, or if we should open cases there,” Vestager said.
McDonald’s is accused of channelling money through a Luxembourg-based subsidiary with a Swiss branch to exploit a generous tax break on intellectual property rights. It is a similar structure to that used by a host of multinationals exposed by the Guardian’s LuxLeaks investigation last year.
The trade unions claim that McDonald’s Luxembourg subsidiary employs just 13 people, yet booked €834m of revenue in 2013 – which would work out at more than €64m per worker.
Heidi Barker, a spokeswoman for McDonald’s, which on Monday promised to transform itself into a more modern, progressive and transparent burger company, said: “We will decline to comment on your inquiry.”
The commission has already opened investigations into the tax affairs of Amazon in Luxembourg, Apple in Ireland and Starbucks in the Netherlands.