EU probe into McDonald's tax arrangements nears finale

European Union antitrust regulators are nearing the conclusion of a tax avoidance probe against McDonald's Corporation for an alleged illegal arrangement with the Luxembourg government.

Following on from recent rulings against Starbucks and Fiat Chrysler, the European Commission will confirm in a matter of days that it has opened a similar investigation into whether EU state-aid laws are being violated, according to sources cited by the Wall Street Journal.

The EC, which is also probing tax deals struck by Amazon and Apple in Ireland and Luxembourg, sent a letter to the Luxembourg government in March to demand an explanation of the arrangements with McDonald's.

If the EC rules that the company also benefitted from an illegal state aid arrangement, McDonald's could be forced to repay a sizeable sum in back-taxes.

The EC's action followed a question to the European Parliament from a French journalist who requested an explanation of how McDonald's had saved an apparent €1.05bn by, he claimed, "not paying its taxes in several EU Member States between 2009 and 2013".

"Evasion is based on a clever internal financial set-up which enables the amount declared to the tax authorities to be reduced and passed through Luxembourg, itself already at the heart of a financial scandal," Jean-François Jalkh said.

"This multinational symbol of ‘soft’ US power is therefore making additional unearned profits on the back of European taxpayers, the same taxpayers being asked to pay the cost of the global financial crisis and the austerity policies imposed by the Commission."