Friends don't let friends stay in something as stupid as the EU - Credit, public domain

The European Union has announced the result of its investigation into McDonald’s and the deal the company had with Luxembourg. All entirely legal they say – despite the fact that no taxes were being paid. This will of course enrage the usual types but it seems fair enough. For the EU doesn’t actually have the right or power to comment upon particular tax rates:

BRUSSELS (Reuters) – McDonald’s avoided having to repay millions of euros in back taxes after EU antitrust regulators said that its tax deal with Luxembourg was not illegal, citing quirks in the Grand Duchy’s bilateral tax treaty with the United States.

This is indeed what was said:

Yes, even despite this:

Rather than state aid, the commission found tax loopholes that had allowed a McDonald’s franchising unit to avoid paying taxes on either side of the Atlantic. Ms. Vestager said Luxembourg’s treatment of McDonald’s defies tax fairness but doesn’t amount to a special deal because it is in line with a U.S.-Luxembourg double-taxation treaty.

The basic background here is that the details and rates of taxation are for the nation states to decide upon. It’s not an EU competence. However, state aid is indeed an EU competence and they’re allowed to root that out or demand its repayment where they find it. The difference between tax problems and state aid? If it’s available to all who structure themselves the right way then it’s tax not state aid. If it’s only available to the favoured few then it’s state aid. Perhaps not exactly and wholly but roughly enough.

So, the EU found that anyone who structured themselves in this manner could have a tax free deal. Thus it’s not state aid. And, therefore, nothing for the EU to do anything about.

This will come as a disappointment to those insistent that all business should just be paying more in tax. But, the Apple/Ireland case apart which seems to hinge on the same distinction, something of a comfort to those who believe in the rule of law.

Subscribe to The CT Mailer!

4
Leave a Reply

Please Login to comment
3 Comment threads
1 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
3 Comment authors
BB01Spikejgh Recent comment authors

This site uses Akismet to reduce spam. Learn how your comment data is processed.

  Subscribe  
newest oldest most voted
Notify of
Spike
Member

“doesn’t amount to a special deal because it is in line with a…treaty” — But, for example, the current renegotiation of the North American Free Trade Agreement has nothing to do with free trade, and everything to do with special deals, including the special deals already in NAFTA (benefitting Canadian dairies and media companies and American automakers) and the special deals Trump seeks to insert in the new edition (or else decree the special deal of tariffs on Canadian cars). Sure, the treaty language is not written as a wet kiss to a single business, but that is the way… Read more »

jgh
Member
jgh

“having to repay millions…”

*re*pay? So, they received millions and now have to return them? I don’t see that that happened. What they are talking about is have to *pay* millions, not *re*pay millions. Jeez, and this is REUTERS!!!!!

Spike
Member

Yes, this is Reuters, which consistently holds that all funds properly belong to government, despite transitory acts that allow individuals to exercise stewardship over the funds. Hence, repay. “Give back to The Community.”

BB01
Member
BB01

EU rules do not apply to Germany, France or Luxembourg – the first two because they own the EU, rules for thee not me, the last because oodles and oodles of money in private banks and secret accounts belonging to… well you know who.