BERLIN: The European Union launched a probe yesterday into tax deals between US fast food giant McDonald’s and Luxembourg, as it widens an investigation into tax avoidance by major multinationals that include Amazon and Apple.
The case against one of the world’s most iconic companies adds to a series of probes begun last year following the LuxLeaks affair, which revealed that top global companies had negotiated lower tax rates, in some cases as low as 1 percent, in secret pacts with Luxembourg.
The revelations, unearthed by investigative journalists, were a huge embarrassment to European Commission head Jean-Claude Juncker, who had just taken up his post after nearly two decades as Luxembourg premier.
The European Commission, the EU’s competition regulator, “has opened a formal probe into Luxembourg’s tax treatment of McDonald’s,” a statement said.
“Its preliminary view is that a tax ruling granted by Luxembourg may have granted McDonald’s an advantageous tax treatment in breach of EU state aid rules,” it added.
The case against McDonald’s stemmed from a complaint by trade unions and the charity War on Want that accused McDonald’s of avoiding around 1 billion euros (US$1.1 billion) in taxes between 2009 and 2013 by shifting profits from one corporate division to another.
Specifically, the commission said it believed McDonald’s arrangements with Luxembourg meant it paid no local tax, nor its dues to the US authorities under treaties between the small Duchy and Washington.
In a statement, Luxembourg said it “would fully cooperate” in the probe.
