McDonald’s UK pays £132m to Luxembourg

Bradley Gerrard
McDonald's has put more focus on selling coffee at its outlets - © 2016 Bloomberg Finance LP

McDonald's British operation paid £132m in “franchise rights” last year under a controversial structure that allegedly limits its bill to the Exchequer.

The payments are believed to go to the fast food giant’s Luxembourg operation, whose tax payments are currently under investigation by the European Commission.

McDonald’s has historically pooled royalty fees from around Europe at a company in Luxembourg, at a cost of hundreds of millions of pounds to the UK operation. Last year, amid EU scrutiny over its situation in the tiny Duchy, it said it would move its base for non-US revenues to the UK.

Accounts for 2016, filed by McDonald’s Restaurants Limited at Companies House, are believed to represent the last year under the old structure. They show franchise payments rising from £122.7m to £132.2m.

This cut operating profit for the year by almost a third on what it would have been without the franchise payments.

McDonald’s Restaurants Limited posted a 6pc rise in pre-tax profits to £287.5m in 2016 on the back of a 2.5pc rise in revenue to £1.57bn. It did not ­respond to requests for comment in ­relation to the franchise rights fees.

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