Report: McDonald’s ducks EU tax

Unions have called on the European Commission to investigate whether McDonald's avoided over 1 billion euros (currently $1.13 billion, although the euro's value has fallen against the dollar's recently) in taxes between 2009 and 2013 by routing revenues through Luxembourg. North America's Service Employees International Union, the European Federation of Public Service Unions, and the European Federation of Food, Agriculture and Tourism Trade Unions joined with the charity War on Want to bring the claims forward.

"McDonald's engaged in aggressive and potentially abusive optimization of its structure, which has led to the avoidance of significant amounts of tax across the Continent," the groups charge in a report.

The Commission has opened investigations into deals that some countries have cut with multinationals, including agreements between Luxembourg and the carmaker Fiat and online retailer Amazon.com. The EU executive has also launched investigations into tax schemes set up for Apple in Ireland and for Starbucks in the Netherlands.

Furthermore, the Commission has asked all EU member states to submit lists of every company granted special treatment by the tax authorities between 2010 and 2013, following allegations that Luxembourg had helped hundreds of corporations avoid paying billions of euros in taxes.

'Applicable laws'

According to the report, McD Europe Franchising Sarl received 1 billion euros from franchisees and subsidiaries across Europe in 2013. The corporation, however, paid tax of just 1.4 percent on profits of over 250 million euros in 2013, below the headline Luxembourg corporate rate of about 29 percent. The labor groups and charity allege that the low tax could come as a result of tax breaks provided to the parent comapny in exchange for the intellectual property - brand royalties, corporate know-how, etc. - provided to franchises. Although the report also alleges that the company could also benefit from the fact that it conducts many of its operations through its Swiss branch.

Representatives say McDonald's "complies with applicable laws, including payments of the taxes that are owed in each country in which we operate."

McDonald's has more than 7,850 restaurants in Europe, serving some 15.7 million customers a day and employing about 425,000 people, according to a company website. Germany, the United Kingdom and France, the three most populous member states, make up the company's largest EU markets. The civil society groups have reported that the alleged 1 billion euros in tax savings reflect what McDonald's might have paid in tax if the company had retained the royalties in the countries where it took them in.

In the past year, McDonald's has also come under fire for its sanitary conditions in Russia and labor practices in the US.

mkg/msh (Reuters, dpa)