EU regulators query Luxembourg on McDonald's tax deals: source

By Foo Yun Chee

BRUSSELS (Reuters) - European Union antitrust regulators have asked Luxembourg for information on its tax rulings for McDonald's after labor unions accused the U.S. fast food chain of avoiding taxes, a person involved in the issue said on Tuesday.

The move, which neither the EU nor Luxembourg would immediately confirm, falls well short of the proceedings the EU has instigated against other U.S. multinationals in Luxembourg and elsewhere, where Brussels believes unfairly low taxation may have distorted competition. It does, however, put the hamburger restaurant group's financial arrangements into the spotlight.

Unions from the United States and Europe and British-based charity War on Want last month urged the European Commission to investigate what they said involved about 1 billion euros ($1.07 billion) in tax between 2009 and 2013.

"The Commission has sent a letter to Luxembourg asking them to clarify the facts," the source told Reuters.

McDonald's did not immediately respond to a request for comment. A spokesman for the Luxembourg government said he was not aware of the letter. A Commission spokesman declined comment on whether a letter was sent to Luxembourg about McDonald's.

The Commission's competition authority last year launched four investigations into whether deals struck with three national taxation authorities in the EU -- known as tax rulings -- constituted illegal state aid for the firms concerned.

If proven, those could mean Amazon and FIAT paying back large sums in back-taxes to Luxembourg as well as Starbucks to the Netherlands and Apple to Ireland. Belgian tax rulings are also being probed.

LUXEMBOURG FOCUS

A spokesman for Competition Commissioner Margrethe Vestager said: "Combating tax evasion and avoidance is a top priority ... The Commission is taking a structured approach when using its state aid enforcement powers to investigate where it believes that selective tax advantages distort fair competition."

The Commission, headed since November by Jean-Claude Juncker, has moved to insist on all 28 member states making tax arrangements with multinational firms more transparent. It says it plans further regulation this year to prevent what critics say have been schemes that benefit global firms and some small states at the expense of government revenues in other countries.

Juncker himself, who was finance minister and prime minister of Luxembourg for a quarter-century, has deflected criticism for his country's use of tax rulings to attract foreign businesses and says his priority is a level playing field across Europe.

(Additional reporting Lisa Baertlein in Los Angeles; Editing by Alastair Macdonald and Susan Thomas)