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McDonald's to move non-US tax base to UK McDonald's to move non-US tax base to UK
(about 1 hour later)
McDonald's is to move its non-US tax base from Luxembourg to the UK, the company has said.McDonald's is to move its non-US tax base from Luxembourg to the UK, the company has said.
The new holding company will pay UK tax on the royalties the firm receives outside the US.The new holding company will pay UK tax on the royalties the firm receives outside the US.
McDonald's said it had chosen the UK due to the "significant number of staff" it has in London.McDonald's said it had chosen the UK due to the "significant number of staff" it has in London.
The Luxembourg tax affairs of the burger giant are currently under formal investigation by the European Commission.The Luxembourg tax affairs of the burger giant are currently under formal investigation by the European Commission.
McDonald's said that the holding company would have "responsibility for the majority of the royalties received from licensing the company's global intellectual property rights outside the US".McDonald's said that the holding company would have "responsibility for the majority of the royalties received from licensing the company's global intellectual property rights outside the US".
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A McDonald's spokesman said the shift in the tax domicile for its non-US operations was not to do with obtaining a better rate of corporation tax, but was more to do with making its operations more efficient.A McDonald's spokesman said the shift in the tax domicile for its non-US operations was not to do with obtaining a better rate of corporation tax, but was more to do with making its operations more efficient.
"This unified structure will be administratively simpler and will reduce expenses and enhance flexibility," the firm said."This unified structure will be administratively simpler and will reduce expenses and enhance flexibility," the firm said.
Prime Minister Theresa May's official spokeswoman said: "We welcome continued investment from companies around the world into the UK, particularly where that's securing growth and increasing jobs."
The office in Luxembourg will remain responsible for the restaurants in that country, but "other functions will transfer to the new UK-based holding company," McDonald's said.The office in Luxembourg will remain responsible for the restaurants in that country, but "other functions will transfer to the new UK-based holding company," McDonald's said.
On Tuesday, the European Commission began a formal investigation of Luxembourg's tax deal with McDonald's.On Tuesday, the European Commission began a formal investigation of Luxembourg's tax deal with McDonald's.
The Commission's preliminary view is that the deal may have breached European state aid rules.The Commission's preliminary view is that the deal may have breached European state aid rules.
It said that since two tax rulings given by Luxembourg in 2009, a McDonald's subsidiary had effectively paid no corporation tax, despite recording substantial profits - for example, of more than €250m (£210m) in 2013.It said that since two tax rulings given by Luxembourg in 2009, a McDonald's subsidiary had effectively paid no corporation tax, despite recording substantial profits - for example, of more than €250m (£210m) in 2013.
The UK's corporate tax rate is currently 20%, and the government plans to cut it to 17% by 2020, the lowest in the G20.The UK's corporate tax rate is currently 20%, and the government plans to cut it to 17% by 2020, the lowest in the G20.
The Republic of Ireland, which has attracted US multi-nationals such as Apple, has a corporate tax rate of 12.5%.