McDonald’s Moving Tax Base to the UK

McDonald’s

McDonald’s plans to move its international tax base from Luxembourg to Britain, the fast food burger chain said today.

The shift in tax domicile for the company’s non-U.S. operations was not about obtaining a better rate of corporation tax, but about making its operations more efficient and cutting costs, a McDonald’s spokesman told the BBC.

McDonald’s is under formal investigation by the European Commission and faces a potential order to pay back $500 million in taxes to Luxembourg.

The investigation comes as the Commission tries to tighten tax rules across the EU in the wake of the Luxleaks scandal, in which whistle blowers revealed Luxembourg had struck sweetheart tax deals with big multinationals in a bid to attract jobs and investment.

McDonald’s will field most its royalties from licensing deals outside the U.S. via a new international holding company domiciled in the U.K., the company said.

Several international companies have shifted their corporate registration to the U.K. since it relaxed its rules on taxes of companies’ foreign subsidiaries in 2012. The British government plans to bring down its corporate tax rate from 20 percent to 17 percent by 2020.

Image: McDonalds Outlet