EU Launches Probe Into McDonald’s Alleged Tax Avoidance in Luxembourg

BRUSSELS (Sputnik) – The European Commission (EC) has opened on Thursday a formal investigation into whether McDonald's fast-food chain was given an unfair tax preference by Luxembourg that violated the EU legislation, a statement on the EC website said.

"The Commission has opened a formal probe into Luxembourg's tax treatment of McDonald's. 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," the statement read.

According to the EU executive body, two tax rulings issued by the Luxembourg authorities in 2009 have allowed McDonald’s Europe Franchising to pay no corporation tax in the country for almost seven years.

Luxembourg authorities claimed they believed that McDonald’s paid taxes in the United States, therefore, the company’s profits were not subjected to taxation in the Grand Duchy in compliance with the Luxembourg – US Double Taxation Treaty.

"The purpose of Double Taxation treaties between countries is to avoid double taxation – not to justify double non-taxation," EU Competition Commissioner Margrethe Vestager was quoted as saying in the statement.

The European Commission's investigation comes two months after it ordered Luxembourg to recover back taxes from Fiat Chrysler and the Netherlands to do the same for Starbucks, because their tax deals were considered unlawful.