According to the revelations of the newspaper l’Express, the French tax authorities would have notified McDonald’s of a tax adjustment of €300 millions at the end of 2015, including €100 millions of penalties.[1]
This tax adjustment constitutes a new step in the investigation opened at the end of 2013 following the search at the head office of the company. Indeed, McDonald’s had substantially modified its corporate and tax structures in 2009 by activating a company in Luxembourg with two branches in Switzerland and the US, by moving its European management from London to Geneva and then by sending the royalties on trademarks and know-how paid by the French franchisees and exclusive restaurants to this company in Luxembourg. This structural change has led to a substantial reduction of the taxable benefits of the French branch since 2009.[2] The investigations that have been conducted have brought to light the tax illegal practices of the company, and led to the indignation of a part of the civil society which campaigned to show its disapproval of such practices by the fast-food group.
Three hundred millions of Euros, is it even enough?
This adjustment comes within the scope of several ongoing procedures and investigations against the fast-food group, and during a difficult social context for the company.[3]
And yet, the fast-food giant has not compromised.
Thus, we owe a coalition of Europeans and Americans unions and NGOs[4], the huge work of having published in February 2014 the report “Unhappy Meal”, evaluating a possible loss of 1 billion Euros of taxes in Europe between 2009 and 2013.[5]
Following this report crystallizing the mobilization of the civil society, several procedures and investigations in Europe have been initiated on a national level:
- In Italy, a tax complaint was lodged by consumers’ associations (CODACONS, MOVIMENTO DIFESA DEL CITTADINO and CITTADINANZATTIVA) in September 2015.[6]
- In France, a case has been filed in December 2015 by unions members of a branch of McDonald’s France for “laundering of tax fraud proceeds, misappropriation of company assets, filing of misleading financial statements, forgery and handling of these offences.”[7]
- In Spain, the Spanish tax authorities are also enquiring on the tax practices of the company.[8]
At the European level, thanks to the impulsion of Margrethe Vestager, the European Commission opened in December 2015 an investigation for illegal State aid, blaming the Luxembourg tax authorities for having granted a “tax ruling” allowing McD Europe Franchising Sarl to benefit from the tax convention between the US and Luxembourg and therefore not paying tax in Luxembourg despite the fact that the royalties were not taxed in the US as well.
Furthermore, the company is also facing a case filed in January 2016 before the European Commission by the three aforesaid Italian consumers’ groups on the grounds of McDonald’s potential anti-trust practices, notably by an abuse of dominant position to the detriment of Consumers.[9]
Interviewed twice by the Tax Comittee of the European Parliament, and for the last time in March 2016, McDonald’s did not convince the members of parliament and did not answer to the charges pressed against the group.
Facing many procedures and investigations, and in a general context of a global fight against tax evasion and claiming transparency, McDonald’s must provide explanations to tax administrations, but also to its own employees.
Thus, on the occasion of the International Day of fast-food workers held on the 14th of April, 2016, several rallies of McDonald’s employees, notably in front of the restaurant of Disneyland Paris, demonstrated to condemn the tax practices of the company and their precarious conditions of work. Indeed, it is important to underline that the fast-food giant is also the giant of “Mc Jobs” and precariousness.
For now, it seems that the French tax authorities have heard their claims. It is now the turn of the European authorities to assert their authority by reinforcing the regulation.
See: http://www.france24.com/fr/20160120-entretien-intelligence-economique-evasion-fiscale
[1] http://lexpansion.lexpress.fr/entreprises/menu-big-fisc-pour-mcdonald-s_1784249.html
[2] http://tempsreel.nouvelobs.com/economie/20160419.OBS8856/300-millions-d-euros-de-redressement-mcdonald-s-rattrape-par-le-fisc-francais.html
[3] http://www.commerce.cgt.fr/spip.php?page=article-6Actus&id_article=1838
[4] http://www.epsu.org/a/11173
[5] http://www.notaxfraud.eu/sites/default/files/dw/FINAL%20REPORT.pdf
[6]http://www.repubblica.it/economia/2015/10/01/news/esposto_contro_mcdonald_s_sulla_possibile_evasione_fiscale-124010471/
[7] http://www.humanite.fr/le-menu-fiscal-de-mcdonalds-le-maxi-benefice-emporter-593317
[8] http://economia.elpais.com/economia/2016/02/20/actualidad/1455994666_356182.html
[9] http://www.lemonde.fr/economie/article/2016/01/12/trois-associations-accusent-mcdonald-s-d-abus-de-position-dominante_4845767_3234.html
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