McDonald’s moves to end twin French tax probes with settlement

McDonald’s Corp. reached twin settlements with French criminal and tax authorities that are set to be revealed as soon as Thursday as it seeks to end cases into allegations it unfairly shifted profits out of the country to avoid paying more tax, according to people familiar with the issue.

McDonald’s is due to seek approval Thursday from a Paris judge to settle the criminal case with French prosecutors that’ll include a fine but no guilty plea, said the people, who asked not to be identified because the matter is private. A parallel civil tax settlement with French authorities is expected to be detailed on the same day.

The McDonald’s case centered over claims it artificially lowered profits in France by shifting money to Luxembourg.

In an April filing, McDonald’s said it set aside $500 million of non-operating expenses for a potential settlement related to an international tax matter. The total amount to settle the civil and criminal cases could still be higher.

The twin settlement would be reminiscent of a 965 million-euro accord reached by Google in 2019 to end French cases where it had also been accused of unfairly shifting profits. In the Google and the McDonald’s case, French investigators carried out separate raids at their respective local premises within days of one another six years ago.

News reports of the McDonald’s civil tax case run further back when in 2014 magazine L’Express said French authorities were scrutinizing royalties sent to a Luxembourg subsidiary. At the time, McDonald’s said it complied with applicable laws and regulations.

When contacted for comment ahead of the Thursday hearing, McDonald’s representatives and lawyers in France didn’t respond immediately.

— With assistance from Leslie Patton

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