city of london

McDonald’s has announced its intention to move its non-tax base to London from Luxembourg.

The fast-food giant will create a new holding company in the UK, and will pay UK taxes on any profits earned outside of the U.S. It said it came to the decision after taking into consideration the vast amount of employees it has within the UK.

In a statement, the company said that the new holding would have the “responsibility for the majority of the royalties received from licensing the company’s global intellectual property rights outside the US”.

“This unified structure will be administratively simpler and will reduce expenses and enhance flexibility,” the firm said.

On Brexit

“The reasons for changing the location of the corporate structure to the U.K. were sound before Brexit and remain so beyond it,” the company remarked.

“These strengths are unlikely to change as the U.K. negotiates leaving the European Union.”

The company emphasised that their “significant number of staff based in London working on our international business, language, and connections to other markets.”

The move has attracted speculation that the company were most likely motivated by UK’s corporate tax rate. The UK rate currently rests at 20 percent, with government plans to reduce it further to 17 percent by 2020, which would make it the lowest within the G20.

Under Investigation

Mcdonald’s remains entangled in an EU investigation on the company’s tax activities, centred on whether it utilized Luxembourg to facilitate the taking of large corporation tax breaks.

Amid the criticism, the brand stated that it continues to pay “a significant amount of corporate taxes.” In addition, they noted that from 2011 to 2015, “we paid more than $2.5 billion in corporate taxes in the EU, with an average tax rate approaching 27 percent,”.

The company receives about two-thirds of its income from its operations outside the U.S, with France making up its second largest market.

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Nicole Jeary
Nicole covers emerging global economic and political events for The UK Investor Magazine. Her focus is particularly upon company news and political developments in Europe and the US.