The European Commission yesterday announced the decision to open an investigation into possible fiscal State aid from Luxembourg to fast food chain McDonald's.
The investigation, which follows the recent Commission ruling which accused Luxembourg and the Netherlands of granting selective tax advantages to Fiat and Starbucks, respectively, will examine whether Luxembourg has provided McDonalds with a competitive advantage by allowing the restaurant chain to pay little to no taxes on its franchise profits.
"A tax ruling that agrees to McDonald's paying no tax on their European royalties either in Luxembourg or in the US has to be looked at very carefully under EU state aid rules," commented Commissioner Margrethe Vestager, in charge of competition policy. "The purpose of Double Taxation treaties between countries is to avoid double taxation - not to justify double non-taxation."
A statement released yesterday by the Ministry of Finance reported that it "considers that no special tax treatment nor selective advantage have been granted to McDonald's", whilst the Commission claimed that despite profits of more than €250 million in 2013, McDonald's Europe Franchising had paid no corporate tax in the Grand Duchy since two tax rulings given by Luxembourg authorities in 2009. In response, McDonald's argued that Luxembourg authorities recognised the US branch of its Europe Franchising as the region where the majority of profits should be taxed, exempting them from being taxed in the Grand Duchy.
The Ministry of Finance stated that "Luxembourg will fully cooperate with the Commission in the investigation."
Photo by Peter Menzel
