McDonald’s UK move as firm clashes with EU regulators

Many schemes are 'just treading water' the PPF has warned
Many schemes are 'just treading water' the PPF has warned

McDonald’s is moving its non-US tax base to Britain from Luxembourg as it battles EU regulators over its tax affairs.

The fast food firm is to create a new UK-based holding company through which its non-US royalties will be routed.

The company said in a statement: “McDonald’s selected the UK for the location of its new international holding structure because of significant number of staff based in London working on our international business, language, and connections to other markets.

“This change has a clear business rationale in matching our corporate structure to our new functional structure.”

As a result, McDonald’s said it will pay UK corporation tax on its international profits.

The group has come under fire from EU antitrust officials who are investigating claims that McDonald’s avoided more than one billion euro in tax through the use of a royalties loophole in Luxembourg.

Last year, the European Commission said the European arm of McDonald’s has paid virtually no corporation tax in Luxembourg or the US since 2009, despite making significant profits in the division.

But the chain said in its defence: “McDonald’s pays a significant amount of corporate taxes. For perspective, from 2011-2015, we paid more than 2.5 billion US dollars in corporate taxes in the EU, with an average tax rate approaching 27%.”

The EU’s competition commissioner Margrethe Vestager has put the tax affairs of a number of high-profile targets including Amazon and Google under the microscope.

Earlier this year, the EU slapped US tech giant Apple with a 13 billion euro (£11.1 billion) tax bill.

Asked about the McDonald’s move, Prime Minister Theresa May’s official spokeswoman said: “We welcome continued investment from companies around the world into the UK, particularly where that’s securing growth and increasing jobs.”