McDonald's is enjoying a turnaround from years of declining sales in the United States, but the company's business in France may be threatened by fraud allegations. Police raided Mickey D's headquarters outside of Paris on May 18 as part of an investigation into "aggravated tax fraud and money-laundering," reports the Associated Press.
Authorities claim McDonald's France artificially reduced profits by transferring money to its parent company in Luxembourg. That allowed the chain to pay a reduced tax rate. McDonald's reportedly says it has paid all income taxes "in France in accordance with current legislation."
One attorney familiar with McDonald's finances told the AP the chain saves $83.8 million on its taxes annually. The Big Mac purveyor claims payments made to the parent company are meant to cover "rights of know-how use and transfer." Executives seem to feel the chain is being unfairly targeted: "McDonald's France has had enough of amalgams, common misconceptions, and untruths," Alexis Bourdon, vice president in charge of finance, told the AP.
McDonald's told the New York Times it is "cooperating fully with the authorities on this matter." The company's French operation makes about $4.5 billion in annual sales, according to the Times.