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McDonald's to pay France €1.2bn to settle tax evasion case

McDonald’s agreed to pay France EUR1.2Billion (PS1Billion) in settlement of a case where the fast-food company was accused of years’ worth of tax evasion.

French prosecutors claimed that the US fast-food giant concealed French profits in Luxembourg, which has lower taxes, and reported artificially low profits to France.

This was done by diverting the fees from its French franchise restaurants to units in other countries. This reduced the company’s taxable income.

French media reported first in 2014 that authorities were looking into royalties sent to a McDonald’s affiliate in Luxembourg.

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A tax fraud probe was launched in 2016 after a union legal complaint. McDonald’s French headquarters were also searched.

McDonald’s lawyers claimed that the settlement was not an admission by McDonald’s of guilt.

Lawyer Denis Chemla stated to reporters that it was a judicial agreement… to prevent a trial which can be very lengthy and invariably uncertain.

McDonald’s is just one of many multinational companies that have been accused tax evasion.

After being accused of unfairly shifting profits, Google, now Alphabet Inc., agreed to pay France $1 Billion in 2019.

McDonald’s France has over 1,500 restaurants. Many of these franchises pay a licensing fee to use the brand, IT systems, and restaurant decoration.

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According to the company, the settlement included the use of its brand as well as know-how during the period 2009 through 2020.

It will now close the tax and criminal cases in France.

McDonald’s France, McDonald’s System of France and MCD Luxembourg Real Estate, as well as other related companies, agreed to pay fines, penalties, and back taxes totaling EUR1.2 billion.

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