McDonald’s Luxembourg tax arrangements are within the law

The European Commission has found that the arrangement between McDonald’s and Luxembourg allowing the fast-food chain to pay almost no tax on its profits in that country was within the law. This is because it was in line with national tax laws and the Luxembourg-US double taxation treaty.

Commissioner Margrethe Vestager who is in charge of competition policy said: ‘The fact remains that McDonald’s did not pay any taxes on these profits – and this is not how it should be from a tax fairness point of view. That is why I very much welcome that the Luxembourg government is taking legislative steps to address the issue that arose in this case and avoid such situations in the future.’

The Luxembourg government has drafted legislation to amend the tax code to bring the relevant provision into line with the Organisation for Economic Co-operation and Development’s base erosion and...