European Union Investigating McDonald’s Rumored $1 Billion Tax Loophole

McDonald’s subsidiary arrangement is now under preliminary investigation by the EU

Photo Sasabune Omakase Modified: Flickr/erin/CC 4.0

McDonald’s is accused of evading more than $1.1 billion in taxes through a controversial loophole. 

McDonald’s is under investigation by the European Union after a number of trade unions accused the burger giant of evading more than $1.1 billion in taxes by relying on a controversial royalties loophole, reports The Guardian.

The claims state that between 2009 and 2013, McDonald’s paid 16 million euros (approximately $18 million USD) on royalties worth 3.7 billion euros (approximately $4.1 billion). 

According to the Guardian,

“McDonald’s is accused of channeling money through a Luxembourg-based subsidiary with a Swiss branch to exploit a generous tax break on intellectual property rights. It is a similar structure to that used by a host of multinationals exposed by the Guardian’s LuxLeaks investigation last year.”

The trade unions allege that McDonald’s Luxembourg subsidiary has just 13 employees who brought in 834 million euros of revenue in 2013 — more than 64 million euros (approximately $72 million) per individual employee.

“We are looking into the information gained by trade unions when it comes to McDonald’s in order to assess if there is a case, or if we should open cases there,” said EU competition commissioner Margrethe Vestager.

A spokesperson for McDonald’s declined to comment. 

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