McDonald’s pays 1.25 billion euros and avoids lawsuits for tax evasion

Salty addition for McDonald’s to avoid lawsuit: The fast food giant agreed to pay 1.25 billion euros (about $1.7 billion) in France and thus escape criminal prosecution for tax evasion between 2009 and 2020.

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The president of the Paris court, Stéphane Noel, confirmed Thursday that McDonald’s had paid a public interest fine of 508 million euros ($690 million), which the fast food group had accepted.

During this hearing, it was announced that McDonald’s would also pay €737 million (about $1 billion) to tax authorities in connection with the corporate tax evaded by the tax evasion scheme.

This legal agreement in the public interest (Cjip) with the National Financial Prosecutor’s Office (PNF) is the most significant in France to date in terms of tax evasion.

McDonald’s on Thursday welcomed the “conclusion” of a dispute “without acknowledgment of wrongdoing” and emphasized “everything that needs to be done to comply with the laws.” The multinational made $500 million in its accounts for the first quarter of 2022.

The preliminary investigation was opened by the PNF in January 2016 after complaints from McDonald’s Ouest Parisien Business Council and CGT McDonald’s Île-de-France, and was entrusted to investigators from the Central Office for the Fight against Corruption, Financial and Fiscal Crimes (Oclciff).

Since then, justice has established that the restaurant chain, in the crosshairs of tax authorities since 2014, had artificially reduced its profits in France from 2009 by way of royalties for exploiting the McDonald’s brand that the in-house restaurants pay. The European Mother’s Residence is in Luxembourg.

The President of the Judicial Court noted that this led in France to “absorbing a large part of the margins generated by restaurants and reducing the taxes paid by the various structures of the group.”

While everyone at the hearing welcomed the “colleague spirit” of the work that led to this agreement, Occidental President Guillaume Hazard told AFP that “the collaboration with McDonald’s is very late, dating back to 2020,” after a “long” and “complex” investigation. “Pushing the company to its limits” and making it prefer to go to an agreement rather than end the trial.

The national financial prosecutor, Jean-François Bonnert, noted that the fine in the public interest had been set at the “maximum amount” possible.

A messenger from Cjip, criticized at times, defended this agreement which as a whole represented “2.5 times the amount of tax evasion” by the group, or according to him a “real sanction, both symbolic and economic,” making it possible to “respond to transnational fraud.”

Antoine Goctor Munrozier, deputy attorney general at the PNF, confirmed that McDonald’s is “also negotiating a prior transfer pricing agreement with the various countries involved to ensure or regulate the manner in which these royalty rates will be determined in the future.”

In a press release, the Directorate General of Public Finance (DGFip) welcomed the agreement, which “responds to the twofold demand of fairness and tax fairness.”

In terms of Cjip, the absolute record is Airbus, which in 2020 agreed to pay €2.1 billion to avoid prosecution for acts of corruption. But in this case, the aircraft manufacturer from the beginning was in the process of cooperating with justice, according to a source close to the file.

And according to Eva Jolie, the attorney he works with, Caroline’s daughter is a plaintiff.

“With this system, we are condemned to not be able to touch the fruits of our labor,” recalls Gilles Bombard, former secretary of the Works Council, who confirmed the complainants’ intention to open up a “new procedural element” at the individual level.

On Thursday, a coalition of European (EPSU, EFFAT) and American (SEIU) federations spoke of “contempt” for McDonald’s and a “triumph” for employees.

Selon le PNF, treize personnes avaient été placées en garde à vue, parmi lesquelles Denis Hennequin, PDG en 2009 de McDonald’s Europe, Jean-Pierre Petit, PDG de l’enseigne en France, et Salvatore Perri, ex-directeur et Europenéral France From the south.

Will they be prosecuted, now disqualified for their then employer? Several sources interviewed by Agence France-Presse on Thursday seemed to doubt this.

In September 2018, the European Union ruled that the privileged tax treatment that Luxembourg gives McDonald’s was legal.

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