INTERNATIONAL TAX: McDonald’s moves to end twin French tax investigations.

As published on irishtimes.com, Wednesday 15 June, 2022.

McDonald’s has reached twin settlements with French criminal and tax authorities that are set to be revealed as soon as Thursday as it seeks to end cases into allegations it unfairly shifted profits out of the country to avoid paying more tax, according to people familiar with the issue.

McDonald’s is due to seek approval on Thursday from a Paris judge to settle the criminal case with French prosecutors that will include a fine but no guilty plea, according to sources who asked not to be identified because the matter is private. A parallel civil tax settlement with French authorities is expected to be detailed on the same day.

The McDonald’s case centred around allegations it artificially lowered profits in France by shifting money to Luxembourg.

In an April filing, McDonald’s said it set aside $500 million (€481 million) of non-operating expense for a potential settlement related to an international tax matter. The total amount to settle the civil and criminal cases could still be higher.

The twin settlement would be reminiscent of a €965 million accord reached by Google in 2019 to end French cases where it had also been accused of unfairly shifting profits. In the Google and the McDonald’s case, French investigators carried out separate raids at their respective local premises within days of one another six years ago.

News reports of the McDonald’s civil tax case run further back when, in 2014 ,magazine L’Express said French authorities were scrutinising royalties sent to a Luxembourg subsidiary. At the time, McDonald’s said it complied with applicable laws and regulations.

When contacted for comment ahead of the Thursday hearing, McDonald’s representatives and lawyers in France did not immediately respond.

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