McDonald’s to move its international tax base to UK

McDonald's Corp said on Thursday it would move its international tax base to the United Kingdom from Luxembourg after coming under increased scrutiny from European Union regulators over its tax arrangements in the small country.

McDonald's said it would create a new international holding company domiciled in the UK that would receive the majority of royalties from licensing deals outside the United States.

The profits will be subject to British tax, McDonald's said in a statement that was immediately welcomed by the British government, which is under pressure to preserve economic stability as the country prepares to leave the European Union.

"The reasons for changing the location of the corporate structure to the U.K. were sound before Brexit and remain so beyond it," the company said. "These strengths are unlikely to change as the U.K. negotiates leaving the European Union." The Big Mac maker cited the "significant number of staff based in London working on our international business, language, and connections to other markets."

The reorganization comes amid an investigation by the EU into what it says are sweetheart tax deals that smaller states in the bloc offer to multinational companies to lure jobs and investment.

McDonald’s is the latest multinational company to up its invest in the UK since June’s Brexit vote, following a string of technology giants including Apple, Google and Facebook.

The announcement was welcomed at Downing Street, with the Prime Minister’s spokesman saying continuing investment by international companies would secure growth and boost jobs.

The move has however been viewed by some as a rebuke to the EU, which is investigating the chain’s tax affairs and could yet demand nearly $500m (£397m) in back taxes.

EU officials have claimed McDonald’s Luxembourg structure, agreed with the Grand Duchy’s government, amounted to illegal state aid.