McDonald's agreed to pay 1.25 Billion Euros in France to avoid criminal prosecutions for tax evasion. This was according to an agreement that Stephane Noel, president of Paris court, validated on Thursday, June 16.
The judge approved McDonald's payment of a public-interest fine of 508 millions euros. This was accepted by the fast-food chain. McDonald's approved the May payment of 737 millions euros to the tax administration in order to pay its corporate tax that was evaded through this tax evasion scheme.
The McDonald's Group has signed the Cjip legal agreement in public interest (Cjip), which was concluded with the National Financial Prosecutor's Office, (PNF). This is the most significant in France in terms of tax evasion and avoids any lawsuits in France. It also settles the dispute with the tax authorities as well as the public prosecutor. McDonald's, for its part, welcomes the end of the dispute and assures that it will comply with all laws.
French justice accuses the brand of artificially reducing its profits in France since 2009 through royalties paid to its European parent company, based in Luxembourg, by the tax authorities. The president of the court noted that this "led to the absorption of a large portion of the margins generated in France by French restaurants, and to reducing taxes paid in France through the various structures of French group".
Jean-Francois Bohnert (national financial prosecutor) praised the McDonald's agreement. He explained that the public interest fine had been set at the maximum amount that could have been pronounced within the Cjip framework. The total deal is 2.5 times the amount of tax evaded by the group, which amounts to 469 million Euros. It is both a symbolically and economically severe punishment for him.
Jean Francois Bohnert stated that this "convention confirms" the Cjip's particular effectiveness, especially in corporate taxation where financial sanctions are the most appropriate way to respond to transnational fraud.
In a press release, the Directorate General of Public Finances (DGFip), welcomed the agreement. It "responds to a dual requirement of tax fairness as well as justice." "McDonald's paid taxes in France, 2.2 million over the entire period," stated Me Eric Dezeuze (a lawyer for the fast-food company).
After complaints from the WC McDonald's Ouest Paris, and the CGT McDonald's Ile-de-France, the criminal investigation was opened. Workers could file civil actions to seek compensation for the damage they caused. A coalition of European, American and British trade unions as well as a British anti poverty association celebrated a "snub for McDonald's" and a "victory for workers."