McDonald’s agreed to pay $ 1.3 billion to avoid criminal prosecution for tax fraud in France

McDonald’s agreed to pay around 1.25 billion euros ($ 1.3 billion) in France avoid criminal proceedings for tax fraud between 2009 and 2020, according to an agreement accepted on Thursday by the French justice.

The president of the Paris court, Stéphane Noël, has validated the payment of a sanction for public interests of 508 million euros. In May, the fast food chain also approved the delivery of 737 million euros to the treasury to pay the evaded corporation tax.

By accepting this convention of public interest (Cijp), the largest closed with the National Prosecutor of Finance (PNF), the group avoid a trial in France and settle the dispute both with the tax administration and with the public prosecutor.

The accusation against McDonald’s

French justice suspects that the company, which has been under the control of the treasury since 2014, artificially reduced your benefits since 2009through the payment of royalties for the exploitation of the McDonald’s brand to its European parent company based in Luxembourg.

This “led to the absorption of a large part of the profits generated by French restaurants and to the reduction of taxes paid in France by the various structures of the group”, said the president of the court.

Source close to the case that brand commissions “could double” from one McDonald’s branch to another “without any justificationwhich allowed to demonstrate that it was done “exclusively” for tax reasons “.

The public prosecutor of the PNF, Jean-François Bohnert, stressed that the “maximum amount” of the public interest sanction. The whole deal also represents “2.5 times the amount of tax evaded” by the group, € 469 million.

The maximum bond imposed for tax evasion on a company in France was $ 2,181 million for Airbus in 2020.

This “real sanction, both symbolic and economic” confirms “the effectiveness” of the ICJP in the field of corporate taxation, “where the financial sanction is the most appropriate means of responding to transnational fraud,” he added.

In a statement, McDonald’s welcomed the deal that “ends a tax dispute and tax investigation. no admission of guilt“and assured that he works with the French tax administration on his tax regime.

criminal investigation started in 2016 following the complaint of McDonald’s employees in Paris and the CGT union for covering up tax evasion. Employees can apply to the civil court for damages.

Source: AFP