McDonald’s moves non-US tax HQ to Britain from Luxembourg

McDonald’s said Thursday it will shift its fiscal headquarters for the majority of non-US operations to Britain following an EU crackdown on the fast-food giant’s tax benefits from Luxembourg.

McDonald’s is establishing a new Britain-based holding company to cover royalties from most licensing agreements outside the United States. The profits will be subject to British corporate taxes, McDonald’s said.

“The profits of the new international holding company will be subject to UK corporation tax,” a McDonald’s spokesperson said.

The move means McDonald’s will close operations in Geneva. McDonald’s Luxembourg office will remain open, but functions related to business outside the country will shift to Britain.

The European Union has been probing McDonald’s tax deals with Luxembourg following revelations that it and other large companies had negotiated lower tax rates, in some cases as low as one percent, in secret pacts with the tiny country.

The spokesperson said the restaurant chain “pays a signficant amount of corporate taxes.”

From 2011 to 2015, McDonald’s paid more than $2.5 billion in corporate taxes to the EU at an average rate of almost 27 percent, the spokesperson said.

McDonald’s said the move was consistent with a global reorganization undertaken by recently appointed chief executive Steve Easterbrook, who has shaken up the global structure as part of a turnaround to boost profitability.

The move is also an apparent vote of confidence in Britain, which voted in June to exit the European Union.

“McDonald’s selected the UK for the location of its new international holding structure because of a significant number of staff based in London working on our international business, language, and connections to other markets,” the spokesman said.