McDonald's agrees to pay a multimillion-dollar fine to France to settle a process for tax fraud
A McDonald's in France.
A McDonald’s in France.Michael Spengler (AP)

The French justice has validated a multimillion-dollar agreement with the American fast food giant McDonald’s to avoid a process for alleged tax fraud that dates back to the last decade. As confirmed on Thursday by the national financial prosecutor’s office, the popular restaurant chain will pay a total of 1,245 million euros to the French authorities as a fine and payment of back taxes between 2009 and 2020.

The president of the judicial court of Paris, Stéphane Noël, gave his approval this Thursday in a hearing to the payment of a fine of 508 million euros. Added to this are another 737 million that McDonald’s has also agreed to pay to the French treasury to settle its evaded corporate tax, says the Agence France Presse (AFP).

The agreement has been produced through the so-called Judicial Convention of Public Interest (CJIP), a procedure created in France in 2016 through the law of transparency and fight against corruption. It allows the prosecutor to propose to a legal entity —companies, associations or even territorial communities— accused of corruption or other certain crimes of tax fraud, an agreement or agreement by which the accused pays a fine in exchange for stopping the judicial proceeding.

As long as the payment [de la multa y los impuestos atrasados]this validation certifies the end of the public action against the signatory companies” of the agreement, the financial prosecutor of Paris, Jean-François Bohnert, said in a statement.

The National Financial Prosecutor’s Office opened a preliminary investigation against the North American fast food giant in January 2016, following a complaint filed by the McDonald’s Ouest Parisien works council. The French justice suspects that the US chain artificially reduced its profits from 2009, by paying royalties for the exploitation of the McDonald’s brand to its European parent company based in Luxembourg, according to AFP.

This “led to the absorption of a large part of the margins generated by French restaurants and the reduction of taxes paid in France by the various structures of the group,” said the president of the court.

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The agreement has been concluded by all parties. Prosecutor Bohnert assured that the fine was set at the “maximum amount”. The total agreement, of more than 1,200 million euros, represents “2.5 times the amount of taxes evaded” by the chain. It is a “real sanction, both symbolically and economically” that allows “responding to transnational fraud,” he stressed in statements after the hearing.

For its part, McDonald’s congratulated in a statement for an agreement that “ends a tax dispute and a tax investigation without admission of guilt.”

France is, after the United States, the second largest world market for the fast food chain, which has almost 1,500 establishments in French territory. Even before a pandemic that further boosted fast food sales, the North American giant achieved profits of almost 5,500 million euros in 2019, the economic newspaper Les Echos highlighted at the time.

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