McDonald’s Accused by Unions of Super-Sized Tax Avoidance in EU

McDonald’s Corp. was accused by trade unions of dodging more than 1 billion euros ($1.13 billion) in taxes across Europe in another example of Luxembourg helping multinationals to slash their tax liabilities.

McDonald’s routed billions of euros in royalties from its European operations to benefit from a Luxembourg tax loophole, according to a report published Wednesday by a coalition of European and U.S. labor groups.

“This structure is likely to have cost European governments over 1 billion euros in lost tax revenues between 2009 and 2013,” the coalition said.

The Big Mac maker’s tax affairs have come under scrutiny amid a global crackdown on corporate tax-avoidance as governments struggle to increase revenue and reduce deficits. The company’s French offices were inspected by the country’s fiscal authorities in 2013 and the European Union inquired about McDonald’s taxes in Luxembourg, people familiar with the matter said last year.

The Grand Duchy may have approved hundreds of tax deals for multinational corporations. Leaked documents revealed in November that more than 340 companies such as PepsiCo Inc., Ikea Group and FedEx Corp. transferred profits to the country through tax arrangements.

Wednesday’s report “will be carefully processed as market information,” European Commission spokesman Ricardo Cardoso said in an e-mail. McDonald’s representatives in London didn’t immediately have a comment to make when contacted by phone and e-mail. Luxembourg’s finance ministry declined to comment.

The report was published by the European Federation of Public Service Unions, the European Federation of Food, Agriculture and Tourism Trade Unions, the Service Employees International Union and campaign group War on Want.

McDonald’s last month tapped U.K.-born Steve Easterbrook to lead a turnaround as the company, with more than 36,000 outlets in 100-plus countries, grapples with falling sales and earnings. McDonald’s credits Easterbrook with boosting business when he ran outlets in the U.K., where he tweaked menus and took on critics.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE