McDonald’s could pay more than a billion euros to avoid lawsuits in France

The equivalent of hundreds of millions of Big Macs: As part of an agreement, McDonald’s agreed to pay more than a billion euros. This fine, proposed by the national financial prosecutor’s office (PNF) within the framework of a judicial Convention of public interest (Cjip), must still receive Thursday morning the approval of a judge of the seat. This payment will allow the fast food giant to avoid criminal prosecution for tax evasion.

“Use of the Trademark”

Its amount “exceeds one billion euros”, specifies a source close to the file, partially confirming information from several media. The record in this area is held by Airbus, with a fine of 2.1 billion euros paid at the start of 2020. McDonald’s could also accept a compliance program to avoid repeat violations.

Read also: Switzerland creates a specific tax league for large companies

French justice suspects the brand, present in the crosshairs of the tax authorities since 2014, of having artificially reduced its profits made in France by means of royalties paid to its European parent company based in Luxembourg. This practice of “transfer pricing” can be a “tax spring used” within the same group, which “is used exclusively to escape tax”, specifies the source close to the file.

In the case of McDonald’s, these transactions concerned royalties for the “use of the American brand” by the franchise stores with sums which, from one establishment to another, “could double without this being justified by what whatever, which made it possible to prove that it was carried out “exclusively” for tax purposes”, adds this source.

A preliminary investigation was opened in early 2016 by the PNF, after the filing of a complaint by union officials against McDonald’s France for “laundering tax evasion in an organized gang.”

Read again, in 2016: New report exposes McDonald’s aggressive tax practices

The fine which the PNF could obtain payment is “colossal”, salutes the former anti-corruption magistrate Eva Joly, who has become a lawyer for these complainants, with her daughter Caroline Joly. Reached by telephone, the two councils indicated their hope that the Cjip would be approved on Thursday.

This block could not be recognized:catchphrase

Eva Joly, however, saw in this Cjip a “stopgap”. The procedure deserves “a public debate, a real audience with all those responsible. But given the state of justice in France and its congestion, making a decision fifteen years after the facts does not make sense, ”according to her.

Search and custody

The CGT McDonald’s Paris and Ile-de-France welcomed in a press release this “historic victory” against a system that has enabled McDonald’s “to avoid the allocation of participation bonuses to employees, in the absence of profits, and not to pay the tax which the brand should have paid. Their lawyers indicated that the employees could take civil action to obtain compensation for their damage.

In September 2018, the European Union deemed the advantageous tax treatment granted by Luxembourg to McDonald’s legal, thus sparing the king of the Big Mac, unlike other American giants, such as Apple, condemned to reimburse unpaid taxes. As part of the investigation in France, McDonald’s had been the subject of a search in May 2016 at its headquarters by investigators from the Central Office for the Fight against Corruption and Financial and Tax Offenses (Oclciff).

Several former senior executives of the group had been placed in police custody at the start of 2021 without being prosecuted at the time, including Denis Hennequin, CEO in 2009 of McDonald’s Europe, Jean-Pierre Petit, CEO of the brand in France, and Salvatore Perri, former Managing Director France and Southern Europe.

Also read, in 2015: McDonald’s evades taxes thanks to a Swiss branch

As in other cases where a Cjip is proposed for the company, its managers or former managers could accept, in the event of recognition of a possible participation in the offences, to appear within the framework of a guilty plea at the French (CRPC). McDonald’s France, like the PNF, did not respond to requests from the AFP agency on Wednesday.

At the time of the police custody, the group had indicated that the sign “paid all the taxes due in accordance with the legislation in force” and was “among the most important contributors to corporate tax” in France. In its first quarter 2022 accounts, McDonald’s set aside $500 million for a “potential settlement related to an international tax matter.”

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