McDonald’s tax fraud: at the core of the 1.25 billion euro fine, is a union action

One billion two hundred and forty-five million euros – or 1,245,624,269 euros to be more precise: this is the insane amount that McDonald’s agreed to pay the state to avoid prosecuting tax fraud. This case is unprecedented and this morning in Paris Court Rooms 2-13 were crowded to hear the judge validate the agreement reached between the public prosecutor and the king of fast food.

A settlement that does not include fault identification, even though the speaker of the hearing took more than a quarter of an hour to uncover the financial mechanism put in place by the world leader in fast food to avoid corporate tax in France.

a “public interest penalty”

Intermediary companies, license fee schemes, transfer of development costs, service royalty rates, system of subsidiaries and franchisees, triangular profit percentages between France to Switzerland, Luxembourg and the United States… Presentation with PowerPoint, bare the entire “McDo system” Is placed. Thus it would have made it possible to reduce the revenue from the tax authorities by 469 million euros.

Hamburger’s No. 1 bypasses tax authorities regulations exclusively through royalties paid to its European parent company based in Luxembourg.

Proposed by the National Financial Prosecutor’s Office (PNF), the procedure – a legal settlement in the public interest (CGIP) – was eventually approved by the judge who confirmed the amount of the “public interest penalty” and thus launched a subsequent criminal investigation. Closed McDonald’s Ouest Paris Action initiated by the Works Council and CGT McDonald’s le-de-France at the end of 2015.

“It’s brand new! Launched Gilles Bombard, the former general secretary of the said union. The money that the state will receive is the culmination of our union’s vision. In CGT, we have always demanded wages based on transfer of profits . Without our action, the PNF test would not have happened. »

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“We had to bypass Bercy Locke”

Back in 2013. While CGT became a majority on the working council of one of McDonald’s French subsidiaries, its elected representatives are demanding pay increases and profit-sharing bonuses for employees. “Impossible!” then retorts to management, backing up the company’s poor results the accounting balance sheet doesn’t allow.

“We introduced expert evaluations that helped us understand why the company was always in the red when business was great and continued to open new restaurants,” says Gilles Bombard.

The reason was predictable and it was the publication, in early 2015, of a report prepared by a coalition of European and American trade unions that put them on the right track: the number one hamburger company bypassing tax authorities’ rules, specifically through royalties paid to its European parent company based in Luxembourg. The result: an organized non-profit at the expense of the revenues of the state, but also of its more than 75,000 employees, the loss of an estimated income of 969 euros per year for each of them (1).

Attack calculated that fraud in the mandatory levy would exceed €100 billion per year.

“For an investigation to take place it was necessary to bypass Bercy Locke, the trade unionists continue. In order to short-circuit the ministry, we decided to take criminal action and condemn acts of “laundering of tax evasion in an organized gang” It is this action adopted by the PNF, which led to the confirmation of the sanction in billions on Thursday.

“Everyone is at a disadvantage from the tax avoidance of large groups, assures Anne de Haro, attorney and administrator for the UGICT-CGT (General Union of Engineers, Executives and Technicians). Money that is not given to the state by these groups is – therefore the community – is compensated by everyone else’s taxes. »

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For lawyers for complainant trade unions, former anti-corruption magistrate Eva Jolie and her daughter Caroline Jolie, the “huge” size of the fines would be “disruptive” and “could change the practices of large groups”.

On the side of the attack, one specifically notices that the case confirms the magnitude of the amount embezzled at the cost of simple interest. “We should be in the tenth CGIP for tax evasion, explains Vincent Drizet, a member of the organization’s scientific council. The fine with Google had already reached 500 million euros. There, we reach billions. These figures for tax evasion Reveal the limits we are constantly condemning. »

Attack calculated that fraud in the mandatory levy would exceed €100 billion per year. “We can clearly see that large conglomerates are taking away the profits of entities in France with practices that have nothing legal,” explains the tax economist, before warning the government of this victory against McDonald’s. The claim should not be allowed. The reality is that the state’s tax control services are getting weaker every time,” he says.

Employees will get compensation

If the penalty imposed on McDonald’s represents a victory in CGT, we do not intend to stop there. It is unthinkable for the Center to recognize only the state with 5.4 billion euros in turnover in France (2019) as a victim of the firm’s practices. “We are considering all legal follow-up to this decision so that employees can receive compensation for their losses along with multiple participation bonuses that they have not been able to receive due to this fraudulent system”, she announced. a press release.

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“We drew the tiger’s tail,” smiles Anne de Haro. Financialization of companies has become an important task at Ugict-CGT and we have decided to help our selected executives with specialized training. We are in the process of preparing a “Transfer Pricing Guide” planned for the fall.

This case also proves that in order to move things forward, these issues must be raised by the employees and unions. The fight will be really tough. McDonald’s Europe has now moved from Luxembourg to the now more tax-friendly UK.

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About the Author: Forrest Morton

Organizer. Zombie aficionado. Wannabe reader. Passionate writer. Twitter lover. Music scholar. Web expert.

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