On February 25 a coalition of European and American trade unions, joined by the anti-poverty campaign group War on Want, unveiled a report about McDonald's deliberate avoidance of over €1 billion in corporate taxes in Europe over the five year period, 2009-2013.
The report outlines in detail the tax avoidance strategy adopted by McDonald's and its tax impact both throughout Europe and in major markets like France, Italy, Spain and the UK.
The practice essentially consisted of moving the European headquarters from the UK to Switzerland as well as using intra-group royalty payments and channelling them into a tiny Luxembourg based subsidiary with a Swiss branch, according to the unions.
another scandal on #taxavoidance http://t.co/QZddWwvCPa @McDonalds http://t.co/KRS2Vzha4S #2big2cheat @reuters pic.twitter.com/2apo36Yhzp
— taxjustice (@taxjustice_) February 25, 2015
The report is co-authored by EPSU, EFFAT, and SEIU — a coalition of European and American trade unions, representing 15 million workers in different sectors of the economy across almost 40 countries — as well as the UK-based campaign group War on Want.
Things That Make You Go MMMMMM!
Between 2009 and 2013, the Luxembourg-based structure, which employs 13 people, registered a cumulative revenue of €3.7 billion, on which it reported a very low €16 million in tax.
"It is shameful to see that a multibillion euro company, that pays low wages to its workforce, still seeks to avoid its responsibility to pay its fair share of much needed taxes to finance public services we all rely on. Rather than supersizing profits and minimising taxes, McDonald's should change its recipes to ensure that Corporate Citizenship is at the core of its menu," said EPSU General Secretary Jan Willem Goudriaan.
"We call on the European Commission and respective national tax authorities, as well as the European Parliament's newly formed Special Committee on Tax Ruling, to look closely into McDonald's tax practices and take appropriate measures."
Oh! Burger
In 2012, a Reuters investigation revealed that fast food restaurants including Burger King, Subway and McDonald's reduced their European tax bills by having their restaurants send royalty payments for the use of brands and know-how to low tax jurisdictions.
McDonald's accused of dodging $1.13 billion in European taxes, says @MarketWatch http://t.co/0LMw5dfZ27
— War on Want (@WarOnWant) February 25, 2015
Filings in Luxembourg show that McD Europe Franchising Sarl, received over $1 billion in fees from franchisees and McDonald's subsidiaries across Europe in 2013. It paid taxes of just 1.4 percent on profits of $288 million in 2013 — well below the headline Luxembourg corporate tax rate of around 29 percent.
Details of the unions' report will be presented to Members of the European Parliament, Commission officials as well as to the European Commission's platform for tax good governance.
