The Commission ruled in October that Fiat had benefited from illegal tax deals with the Luxembourg authorities, as well as Starbucks Corp with the Dutch.
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Under the deal being investigated by the EC, a subsidiary of McDonald’s has paid virtually no corporate tax in Luxembourg or in the U.S. on profits arising from royalties since 2009.
The EU says that since 2009, McDonald’s Europe Franchising paid no corporate tax in Luxembourg despite large profits.
Luxembourg is appealing a European Union decision that it made illegal fiscal deals with a Fiat Chrysler Automobiles NV unit, vowing to show that the bloc’s antitrust regulator failed to establish any illegal state aid.
“Luxembourg is strongly committed to tax transparency and the fight against harmful tax avoidance”, it added.
The European Commission has launched a formal investigation into Luxembourg’s tax treatment of McDonald’s and said that its preliminary view is that a tax ruling granted to the company may have afforded it advantageous tax treatment in breach of European Union (EU) state aid rules.
Dec 3 EU antitrust regulators opened an investigation on Thursday into McDonald’s tax deals with Luxembourg, saying these enabled the USA fastfood chain to escape paying taxes on its European royalties both in Luxembourg and in the United States. It has become a big political issue as citizens in many European nations are forced to tighten their belt because of the weak economy while some multinationals get away with huge tax breaks.
A spokesman for McDonald’s said the group complies with all tax laws in Europe and pays a “significant amount” of corporate income tax. However, when the ruling was granted in 2009, these profits were not subjected to tax in the US.
He said: “From 2010-2014, the McDonald’s companies paid more than 2.1 billion United States dollars just in corporate taxes in the European Union, with an average tax rate of nearly 27%”.
On the other hand, Luxembourg’s Ministry of Finance said that his Country would fully cooperate in the investigation and that “Luxembourg considers that no special tax treatment nor selective advantage have been granted to McDonald’s”.
“We are subject to the same tax laws as other companies and are confident that the inquiry will be resolved favorably”, the statement said.
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“Any suggestion that we are specifically targeting USA companies is unfounded and untrue”.
