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McDonald's has confirmed that it is restructuring some of its operations so that it will pay tax on most of its non-US royalties in the United Kingdom instead of in Luxembourg.
The fast food giant said in a statement last week that its new UK holding company would have "responsibility for the majority of the royalties received from licensing the company's global intellectual property rights outside the US."
Under the group's existing structure, these royalties are received by a company established in Luxembourg. However, McDonald's did not attribute the decision to the European Commission's ongoing investigation into its tax affairs in that country.
The company said the new structure would be more streamlined and "administratively simpler" because it already employs a significant number of staff in the UK, and because of London's connections to other markets.
On June 6, 2016, the European Commission published the non-confidential version of its decision to open an in-depth investigation into the exemption of profits from corporate taxation of McDonald's in Luxembourg. The Commission said it considers that the tax ruling issued by Luxembourg on September 17, 2009, in favor of McDonald's Europe Franchising may grant state aid to the latter and to the McDonald's Corporation as a whole therefore giving it an unfair selective advantage over other companies in the EU.
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