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EU Regulators Rules McDonald's, Luxembourg Tax Deal Not Illegal

European Union antitrust regulators found that McDonald's did not receive any selective tax treatment from Luxembourg.

The European Commission said it found that the non-taxation of certain McDonald's profits in Luxembourg did not lead to illegal State aid, as it is in line with national tax laws and the Luxembourg-United States Double Taxation Treaty.

Commissioner Margrethe Vestager, in charge of competition policy, said, "The Commission investigated under EU State aid rules whether the double non-taxation of certain McDonald's profits was the result of Luxembourg misapplying its national laws and the Luxembourg-US Double Taxation Treaty, in favor of McDonald's."

"However, our in-depth investigation has shown that the reason for double non-taxation in this case is a mismatch between Luxembourg and US tax laws, and not a special treatment by Luxembourg. Therefore, Luxembourg did not break EU State aid rules."

The EU prevents member states from giving unfair advantages only to selected companies, including through illegal tax benefits.

As there was no illegal state aid, the restaurant chain does not have to pay any additional tax in the EU.

"Of course, 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's 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," Vestager added.

The Luxembourg government is currently considering new tax laws that would "avoid similar cases of double-taxation in the future", according to the commission.

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