£132m Paid by McDonald’s UK to Luxembourg


In 2016,  £132m in “franchise rights”  was paid by McDonald’s British operation under a controversial structure that allegedly restricts its bill to the Exchequer.

The payments are assumed to go to the Luxembourg operation of the fast food giant, whose tax payments are currently under probe by the European Commission.

McDonald’s has historically combined royalty fees from around Europe at a firm in Luxembourg, at a price of hundreds of millions of pounds to the UK operation. In 2016, amid EU inspection over its situation in the tiny Duchy, it stated that it would transfer its base for non-US revenues to the United Kingdom.

Accounts for last year that were registered by McDonald’s Restaurants Limited at Companies House are considered to represent the previous year under the old structure. They reveal franchise payments extending from £122.7m to £132.2m.

This decreased operating profit for the year by nearly a third on what it would have been in the absence of franchise payments.

McDonald’s Restaurants Limited posted a 6pc increase in pre-tax profits to £287.5m last year on the back of a 2.5pc growth in revenue to £1.57bn. It did not ­reply to requests for comment in ­relation to the franchise rights fees.