(19 October 2016) The Unhappy Meal report, published a year and a half ago, exposed how McDonald’s dodged up to €1billion in tax and has since landed the group in a lot of hot water. The fast-food giant has now twice been called to testify in front of the European Parliament about its tax arrangements. Moreover, late last year the European Commission launched a formal investigation, similar to the one that landed Apple a €13 billion bill for unpaid taxes.
Faced with so much scrutiny, most companies would likely change their tax strategy, like Facebook and Apple have already done. But seemingly not McDonald’s.
The coalition of European and American trade unions who conducted the original research has now found that McDonald’s appear to be paying even less tax than before. McDonald’s Europe Franchising Sàrl, the Luxembourg company now being investigated by the European Commission, paid an effective tax rate of only 0.7% in 2015. This is even lower than the 1.0% and 1.4% they paid in 2014 and 2013, respectively, according to McDonald’s own financial accounts in Luxembourg.
The coalition can today publish a letter written to Commissioner Vestager that raises even more questions about McDonald’s corporate structure in Europe. This is an official response to the Commission’s published version of their decision to open an inquiry into the home of the happy meal.
The letter combines the new information available in the Commission’s initial findings with the original research and figures from McDonald’s recent accounts. It raises several red flags about how and when McDonald’s restructured their European operations, creating further suspicion of major tax avoidance via artificial entities with very little economic activity other than funnelling royalties from Luxembourg via Switzerland to the US. These are only compounded by the 0.7% tax rate paid last year in Luxembourg.
The findings come as MEPs and national parliamentarians met on 17-18 October for a major economic conference in Bratislava where tax avoidance is top of the agenda. French MEP Pervenche Berès and German MEP Fabio De Masi used the forum to raise the issue. Both have been at the forefront of the fight to hold the US multinational to account in the European Parliament not the least in the EP’s special tax committee that. Pierre-Alain Muet, a French socialist MP who has taken the fight to the national assembly in McDonald’s largest European market, joined the calls for action to tackle McDonald’s tax and labour practices.
French MEP Pervenche Berès, who is the S&D Group spokesperson on economic and monetary affairs, commented, “The fight against tax avoidance has become one of the European Union's top priorities thanks to the determination shown by organisations such as the coalition of trade unions. I will continue to support them in bringing to light the unfair tax practices used by McDonald’s.”
MP Pierre-Alain Muet, who sits as Vice Chair of the Finance committee of the French National Assembly, added his support, “France is McDonald’s biggest market in Europe, and so the company’s tax optimization and social practices are intolerable. This is why I support the international coalition of trade unions in their fight.”
As more evidence emerges about McDonald’s dodgy tax dealings, support builds around the world and across the political spectrum for this corporate giant to be held to account. McDonald’s needs to change its behavior and pay back what it owes. EPSU is proud to be fighting against tax dodging that deprives our public services of funding. The support we receive from some elected members of parliaments is very appreciated and will be pivotal to achieve real policy change at national and EU levels.
Download below the letter EPSU, the European Federation for Food, Agriculture and Tourism and the American union SEIU have sent to Commissioner Vestager.