Fast food giant McDonald’s has announced it is moving its non-US tax base from Luxembourg to the UK, setting up a new holding company which will pay UK tax on the royalties the company receives outside the US
McDonald's said that the holding company would have ‘responsibility for the majority of the royalties received from licensing the company's global intellectual property rights outside the US’.
Around $1bn (£800m) of income from over 22,000 McDonald’s overseas outlets will now be routed via the UK. The company said the move would streamline operations, stating ‘this unified structure will be administratively simpler and will reduce expenses and enhance flexibility.’
The change in location comes as the European Commission ramps up its formal investigation of Luxembourg's tax arrangements with McDonald's amid claims the company struck a ‘sweetheart’ deal which may breached European state aid rules.
The Commission has reported that since the company left London for Luxembourg in 2009, as a result of two tax rulings given by the Luxembourg tax authorities, a McDonald's subsidiary had effectively paid no corporation tax, despite recording substantial profits - for example, of more than €250m (£210m) in 2013.
A spokesman for McDonald’s said: ‘McDonald’s pays a significant amount of corporate taxes. From 2011 to 2015 we paid more than $2.5bn in corporate taxes in the EU, with an average tax rate approaching 27%.’
