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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 2 hours 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". |
Simon Jack: Why did McDonald's flip out of Luxembourg? | Simon Jack: Why did McDonald's flip out of Luxembourg? |
Kamal Ahmed: Theresa May's post-Brexit economy test | Kamal Ahmed: Theresa May's post-Brexit economy test |
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." | 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. |
'Not worth the hassle' | |
Heather Self, a tax expert at law firm Pinsent Masons, told the BBC that European Commission investigations into corporations' tax affairs were starting to make life more difficult. | |
"It's getting increasingly difficult to maintain very low tax structures around Europe," she said. | |
Companies were also "deciding it's no longer worth the hassle and the risk" of using low-tax arrangements due to work by the OECD on "base erosion and profit shifting" - or corporate tax avoidance, according to Ms Self. | |
Governments are being encouraged to adopt the OECD proposals to stop companies dodging tax. | |
The UK could be attractive to McDonalds as it has a relatively low rate of corporation tax and a pool of highly-skilled potential employees, she added. | |
The UK's corporate tax rate is 20% and the government plans to cut it to 17% by 2020. | |
The Republic of Ireland, which has attracted US multi-nationals such as Apple, has a corporate tax rate of 12.5%. | The Republic of Ireland, which has attracted US multi-nationals such as Apple, has a corporate tax rate of 12.5%. |