After Union Blows the Whistle, McDonald’s Agrees to Pay France €1.25 Billion to Avoid Prosecution for Evading Taxes

Fast food chain McDonald’s has more outlets in France than any other country in Europe. In 2013, there were 1,300 McDonald’s in France that generated €4.4 billion in revenue for the company. After McDonald’s was caught evading taxes between 2009 and 2020, the company agreed to pay the government of France €1.25 billion to avoid prosecution.

Caught red handed

When the Confédération Générale du Travail (CGT or General Confederation of Labour), a French trade union, asked McDonald’s to raise wages and offer profit-sharing bonuses for company employees in 2013, management refused saying that the company wasn’t profitable enough. Union officials suspected that the company was lying and decided to investigate, whereupon they discovered that the company was evading taxes.

“We triggered expert appraisals which enabled us to understand why the company was always in the red when the turnover was very good and it continued to open new restaurants,” – Gilles Bombard, former secretary general of CGT union

Union Exposé

A 2015 report titled “Unhappy Meal: €1 Billion in Tax Avoidance on the Menu at McDonald's” published by a coalition of European and U.S. unions accused McDonald’s of paying royalties to its parent company in Luxembourg (where taxes are much lower) in order to avoid paying taxes in France.

"It is shameful to see that a multi-billion euro company, that pays low wages to its workforce, still seeks to avoid its responsibility to pay its fair share of much needed taxes to finance public services we all rely on," - EPSU General Secretary Jan Willem Goudriaan.

“McDonald’s has to pay its fair share of taxes, and needs to guarantee decent working conditions, fair wages and proper information and consultation rights to all its workers, otherwise the credibility of Social Europe is jeopardised,” - Harald Wiedenhofer, General Secretary of European Federation of Trade Unions in the Food, Agriculture and Tourism (EFFAT)

Protests

One hundred activists staged a protest at a McDonald’s restaurant at Disneyland Paris, demanding that the company pay fast food workers a monthly minimum wage of €1,800

Tax Justice

French authorities raided the company’s headquarters just outside Paris in 2016 to gather evidence. In 2022, Judge Stephane Noel ruled that the company was indeed using Luxembourg to “soak up a large amount of profits made by restaurants in France” and lower its tax bill by €300 million. Noel ordered the company to pay 2.5 times the taxes owed plus a €508 million fine.

Company Response

"This agreement ends a tax case and a judicial investigation without acknowledging fault. McDonald's France is working proactively with French tax authorities to agree the current and future level of brand and knowhow fees.”

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