LONDON (ShareCast) - (Sharecast News) - EU antitrust regulators ruled that fast food giant McDonald's tax deal with Luxembourg was not in breach of EU state aid rules on Wednesday.
The European Commission claimed the US chain was exempt of certain taxes due to differences in US and Luxembourg laws.

Three years after its investigation began as part of a crackdown on illegal sweetheart deals between EU states and multinational corporations that inevitably resulted in the likes of Apple, Starbucks and Fiat being forced to pay back billions of euros in taxes, the Commission ruled that McDonald's tax deal was in line with national tax laws and the joint Luxembourg-US double taxation treaty.

European Competition Commissioner Margrethe Vestager said: "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."

"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," she said.

The investigation was primarily focussed on McDonald's Luxembourg-based subsidiary Europe Franchising, which collects royalty payments from franchisees across the EU, Ukraine and Russia.

Luxembourg, which claimed in a 2009 tax ruling that McDonald's was not required to pay corporate taxes due to its profits being taxed in the States, welcomed the Commission's ruling and the steps it had taken to avoid similar cases arising in the future.

As of 1200 BST, McDonald's shares were flat in pre-market trading at $157.77 per share.

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