McDonald's Is Facing Some Serious Legal Questions in Europe

June 5th 2016

Alex Mierjeski

McDonald's is in deep trouble overseas.

Paris McDonald's

Late last month, French law enforcement agents raided the burger chain's headquarters in Guyancourt, west of Paris, Reuters reported. But they weren't necessarily looking to score any old Royal With Cheese.

Authorities were instead seeking evidence that might lead to information pertaining to tax evasion — part of a larger inquiry into the company's financial practices. In April, the business magazine L'Expansion reported that the company received a 300 million euro ($336 million) restitution bill for "unpaid taxes on profits believed to have been funneled through Luxembourg and Switzerland," according to Reuters.

The company's bill could end up being even larger.

Shortly after media reports of the unpaid tax bill circulated, the European Union announced an investigation into claims made by trade unions that McDonald's avoided more than 1 billion euros ($1.1 billion) in taxes through a royalties loophole in Luxembourg.

McDonald's said recently that it was cooperating with the investigation. It also said that it has paid 1.2 billion euros in taxes since 2009 and has invested in local economies and created jobs. (ATTN: reached out to a McDonald's global spokesperson for comment, but we have not heard back. We will update this story when we do.)

"We are looking into the information gained by trade unions when it comes to McDonald's in order to assess if there is a case or if we should open cases there," EU competition commissioner Margrethe Vestager told The Guardian in May.

French McDonald's

The case comes as many other multinational companies in Europe face questions about their finances, including Amazon in Luxembourg, Starbucks in the Netherlands, and Apple in Ireland. Large companies are often accused of dodging taxes by using controversial loopholes in countries with lax regulations.

In the McDonald's case, the company is accused of using a Luxembourg bank that allowed them to funnel money to a Swiss branch in order to dodge taxes. A large-scale Guardian investigation in 2014 found many multinational corporations using a similar workaround.