French tax

McDonald’s will pay 1.25 billion euros to settle the French tax file

NEW YORK — McDonald’s will pay 1.25 billion euros ($1.3 billion) in France to avoid legal action for tax evasion between 2009 and 2020, under a settlement approved by a Paris court on Thursday.

Judge Stéphane Noël upheld the second largest tax settlement in French history, consisting of a €508m fine and €737m in back taxes already agreed in May, years after McDonald’s was accused of reporting artificially low profits to cut its taxes. invoice.

“Subject to the payment of the fine, the validation of the agreement means the end of the proceedings,” Financial Attorney General Jean-François Bohnert said in a statement.

Hailing the fine as the “maximum amount possible” under such a deal, he added that McDonald’s would pay “2.5 times the amount of tax avoided”.

Since 2014, investigators have been investigating whether the fees paid by McDonald’s French operation to its European parent company in Luxembourg for the use of the chain’s brand were in fact used to artificially reduce its profits.

These allowed the company “to absorb a large part of the profits made by restaurants in France”, Judge Noel said.

A source familiar with the matter told AFP this week that such practices within the same group are “used exclusively to evade taxes”.

They added that branding fees “could double” from one McDonald’s branch to another “without any justification, proving that it was done ‘exclusively’ for tax reasons”.

Prosecutors opened a formal investigation in 2016 after union officials exposed the company for covering up tax evasion.

In a statement, McDonald’s said it had already paid 2.2 billion euros in taxes over the period in question.

“This agreement ends a tax case and a no-fault legal investigation,” the company added.

“McDonald’s France is working proactively with the French tax authorities to agree the current and future level of brand and know-how fees,” he said.

The largest tax fine ever imposed on France dates back to 2020, when the aircraft manufacturer Airbus had to pay 2.1 billion euros.