Labor Groups Accuse McDonald’s of Avoiding European Taxes

CHICAGO (Chicago Tribune/TNS) —

A coalition of European and American trade unions released a report Wednesday accusing McDonald’s European operations of avoiding more than 1 billion euros in corporate taxes.

The group, which includes the U.S.-based Service Employees International Union and the European Federation of Public Service Unions, said the burger giant, headquartered outside Chicago, has been able to adopt a “tax avoidance strategy” by moving its European corporate headquarters from the United Kingdom to Switzerland in 2009 and by sending royalty payments into a tiny Luxembourg-based subsidiary with a Swiss branch. They said McDonald’s has cost European governments more than 1 billion euros in revenue from 2009 to 2013.

“It is shameful to see that a multibillion euro company, that pays low wages to its workforce, still seeks to avoid its responsibility to pay its fair share of much needed taxes to finance public services we all rely on. Rather than supersizing profits and minimizing taxes, McDonald’s should change its recipes to ensure that corporate citizenship is at the core of its menu,” said Jan Willem Goudriaan, the European union’s general secretary.

“We want it to be investigated if it’s lawful, what McDonald’s is doing,” Goudriaan told the Chicago Tribune.

Based on current exchange rates, 1 billion euros translates to about $880 million.

Europe is the largest region by revenue for McDonald’s. The company has previously said it expects the “prolonged economic slowdown” in that part of the world to continue to impact its performance there in 2015.

A McDonald’s spokeswoman said that the company complies with applicable laws, including payments of the taxes that are owed in each country in which they operate.

“In addition to paying taxes on profits, we pay significant taxes for employee social contributions, property taxes on real estate, and other taxes as required by law,” said spokeswoman Becca Hary.

Incoming McDonald’s CEO Steve Easterbrook previously worked in McDonald’s European business. Easterbrook was CEO and president of McDonald’s U.K. from April 2006 to September 2010, and added the role of president of the company’s Northern Division, Europe, from January 2007 to September 2010.

Goudriaan said McDonald’s reputation for low wages in Europe led the group to look into McDonald’s corporate-tax practices in Europe.

“We are interested in this from the perspective of … cuts in public services and the in wages of public-service workers,” Goudriaan said. “We are constantly told the money is not there to invest in pay increases and in services. We are saying the money is there if you look at tax-avoidance schemes of companies like McDonald’s and others.”

The group is asking the European Commission to launch an investigation into McDonald’s European tax practices.

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