Tax fraud police search McDonald's French headquarters

PARIS – French police have searched McDonald’s headquarters outside Paris after a probe was opened for alleged aggravated tax fraud and money-laundering against the local branch of the fast-food company.

The national financial prosecutor’s office said Thursday documents were seized when the tax fraud police unit searched the headquarters in Guyancourt, west of Paris, last week.

Investigators suspect the burger chain of artificially reducing its profits and taxes in France through license fees and other money transfers to its European parent company in Luxembourg.

The Oak Brook, Illinois-based company has said it pays all its income taxes in France in accordance with current legislation.

The French branch says that, like all companies operating in franchising, it pays fees to the parent company to cover rights of know-how use and transfer and that the fees can be deducted from corporation taxes due in France.

It says that the level of the fee is subject to regular back and forth with the different national tax administrations, in France and in other countries where McDonald’s operates.

The search took place on May 18 but authorities disclosed it Thursday.

The prosecutor’s office wouldn’t give any details on the amount of the tax fraud allegedly involving McDonald’s France. But Eva Joly, lawyer for employee representatives in a group of the fast-food chain restaurants in France, said in an interview last December that “the tax savings made by McDonald’s France are estimated at about 75 million euros ($83.76 million) per year.”

McDonald’s France denies any tax fraud. Alexis Bourdon, McDonald’s France vice-president in charge of finance, said in an interview last January that “basically, we are serene, McDonald’s France and its franchisees have paid over 1.2 billion euros in corporate taxes since 2009” in France.

“McDonald’s France has had enough of amalgams, common misconceptions and untruths,” Bourdon said.

Earlier this week, the national financial prosecutor’s office ordered a search at Google’s French headquarters, also looking for evidence of aggravated tax fraud.

The probes reflect an intensifying air of European indignation looming over McDonald’s, Google and other U.S. big companies as they amass huge amounts of cash while allegedly reducing their tax bills through complex manoeuvrs that shield their profits.