The European Commission has found no evidence that double non-taxation of certain McDonald’s profits was the result of Luxembourg misapplying its national laws. Its investigation concluded that the non-taxation did not lead to illegal State aid, as it is in line with national tax laws and the Luxembourg-United States Double Taxation Treaty.
“EU State aid rules prevent member states from giving unfair advantages only to selected companies, including through illegal tax benefits,” said Commissioner Margrethe Vestager, in charge of competition policy. “However, our in-depth investigation has shown that the reason for double non-taxation in this case is a mismatch between Luxembourg and US tax laws, and not a special treatment by Luxembourg. Therefore, Luxembourg did not break EU State aid rules.”
However, the fact that McDonald’s did not pay any taxes on these profits is not fair from a tax point of view. “That’s why I very much welcome that the Luxembourg Government is taking legislative steps to address the issue that arose in this case and avoid such situations in the future,” added Vestager.
In a separate report, The New York Times noted that McDonald’s welcomed the decision from the European Commission. “We pay the taxes that are owed and, from 2013-2017, McDonald’s companies paid more than $3bn just in corporate income taxes in the European Union with an average tax rate approaching 29%,” McDonald’s said in a statement.