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takyon writes:

NPR reports EU Investigating Tax Deal Between Luxembourg, McDonald's:

European regulators have launched an investigation into Luxembourg's tax treatment of McDonald's, saying the fast-food giant's franchise office has paid virtually no taxes on franchise profits it earned in Europe and Russia since 2009.

It's the latest in a series of investigations into corporate tax avoidance schemes by the European Commission, which has also targeted Starbucks and Apple.

"A tax ruling that agrees to McDonald's paying no tax on their European royalties either in Luxembourg or in the U.S. has to be looked at very carefully under EU state aid rules," said Commissioner Margrethe Vestager, who heads the European Commission's competition bureau.

Regulators say authorities in Luxembourg, where McDonald's Europe Franchising office is located, determined in March 2009 that the company should be exempt from corporate taxes because its profits were also taxed in the United States.

The company was required to submit proof every year that it actually paid US taxes on its profits, according to the statement. It stated:

"However, contrary to the assumption of the Luxembourg tax authorities when they granted the first ruling, the profits were not to be subjected to tax in the US. While under the proposed reading of Luxembourg law, McDonald's Europe Franchising had a taxable presence in the US, it did not have any taxable presence in the US under US law."

A subsequent ruling by Luxembourg in September 2009 said McDonald's no longer even had to submit proof it was paying U.S. taxes.

Since then, the company has paid no taxes on virtually all of its European income, despite hefty profits of 250 million euros in 2013 alone, the E.C. said. Investigators will determine whether this gave McDonald's an unfair advantage over its competitors, violating European law.

In a statement e-mailed to NPR, McDonald's said the allegations it paid no taxes are untrue:

"McDonald's complies with all tax laws and rules in Europe and pays a significant amount of corporate income tax. In fact, from 2010-2014, the McDonald's Companies paid more than $2.1 billion just in corporate taxes in the European Union, with an average tax rate of almost 27%.

Previously: Leaked Documents Expose Companies' Secret Tax Deals in Luxembourg
Multinationals Hiding more than USD$500 Billion from G20 Tax Collectors

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