EU Says McDonald's Tax Arrangement in Luxembourg is Legal, Drops Probe

   By Emre Peker 
 

BRUSSELS--European Union regulators said Wednesday that McDonald's Corp.'s (MCD) tax arrangement in Luxembourg is legal, dropping an investigation against the U.S. fast-food giant, in contrast with the barrage of fines it has levied on American tech firms.

Luxembourg's decision not to tax McDonald's is in line with a double-taxation treaty between Luxembourg and the U.S, and does not constitute favourable treatment, according the European Commission--the EU's executive arm and competition authority. The commission launched its probe in December 2015.

"Our in-depth investigation has shown that the reason for double nontaxation in this case is a mismatch between Luxembourg and U.S. tax laws, and not a special treatment," European Competition Commissioner Margrethe Vestager said in a statement.

Luxembourg is taking steps to prevent double nontaxation of companies, as in the McDonald's case, and has drafted legislation to amend its tax code, according to the commission. Ms. Vestager welcomed the move "to address the issue that arose in this case and avoid such situations in the future."

The decision to drop the case against McDonald's comes on the heels massive tax fines of 13 billion euros ($15.16 billion) on Apple Inc. (AAPL) and some EUR250 million on Amazon.com Inc (AMZN) over the last year as the EU cracked down on what the commission argues are sweetheart deals.

Since October 2015, Brussels has also targeted Starbucks Corp.'s (SBUX) tax deal with the Netherlands, ordered Belgium to recoup about EUR900 million from 35 mostly European companies and slapped French utility Engie SA (ENGI.FR) with a EUR120 million bill for undue tax benefits granted by Luxembourg.

Write to Emre Peker at [e-mail]

(END) Dow Jones Newswires

September 19, 2018 06:08 ET (10:08 GMT)

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