tag:blogger.com,1999:blog-1141932539860553199.post7740262647911085049..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: McDonald's taking the piss on corporation tax; HMRC falling for it.Mark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-1141932539860553199.post-83480392267263590782016-11-04T13:34:21.243+00:002016-11-04T13:34:21.243+00:00They could make the outlets prefab.They could make the outlets prefab.James Highamhttps://www.blogger.com/profile/14525082702330365464noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-65551369271240785792016-11-03T15:19:16.148+00:002016-11-03T15:19:16.148+00:00TW oops I meant art 1 clause 5 of course.TW oops I meant art 1 clause 5 of course.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-44621336691578934802016-11-03T13:38:37.651+00:002016-11-03T13:38:37.651+00:00TW, not necessarily. The "permanent establish...TW, not necessarily. The "permanent establishment" override also applies here, see Directive 2003/49/EC article 1 clause 8.<br /><br />Kj thanks.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-35337194731176112772016-11-03T13:31:18.416+00:002016-11-03T13:31:18.416+00:00Clearly, as MW demonstrates, not only does McD hav...Clearly, as MW demonstrates, not only does McD have permanent establishment here, the value of the brand arise from trade done in the UK, trademark protection in the UK, whether or not the IP-value has been created elsewhere originally, or the company is HQed somewhere else. One of the more sensible income tax jurisdictions around, HK, charges witholding tax on royalties, as well as it does on interest, paid to foreign entities - as any logical system of territorial taxation would do, and solve the faff with double taxation treaties. I don't think there is anything wrong with legal tax avoidance, but the EU's special treatment of IP is just weird and unnecessary. Kjhttps://www.blogger.com/profile/13530243002915410700noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-32907946931494085862016-11-03T13:17:57.401+00:002016-11-03T13:17:57.401+00:00The double taxation treaty is over ridden by EU la...The double taxation treaty is over ridden by EU law. It is illegal to tax royalty payments flowing from a corporation in one EU country to a corporation in another EU country. Flat out illegal.Tim Worstallhttps://www.blogger.com/profile/13161727860817121071noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-2595635521944894852016-11-03T08:57:21.935+00:002016-11-03T08:57:21.935+00:00This serves only to illustrate what a mess the tax...This serves only to illustrate what a mess the tax system has got into.<br /><br />In the case of premises owned by Macdonalds, the incidence of the UBR is on them.<br /><br />The incidence of VAT is on the retailer. VAT reductions are only partially passed on in lower prices, if at all. However, in the absence of VAT, competition may bring prices down.<br /> <br />The incidence of PAYE income tax and NI is also on the employer, regardless of who is nominally responsible for paying it.<br /><br />If tax incidence is taken into account, the "avoiders" are paying a decent whack. Whether is is more or less than they ought to pay is another question.<br /><br />Tax systems which can be given the run-around by company accountants and lawyers are not fit for purpose and should be scrapped.Physiocrathttps://www.blogger.com/profile/13682019625346594568noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-47834354478980553752016-11-02T22:02:50.831+00:002016-11-02T22:02:50.831+00:00KJP "Is McDonald’s Restaurants Ltd effectivel...KJP "Is McDonald’s Restaurants Ltd effectively connected with McD Franchising Europe?"<br /><br />Yes.<br /><br />"McDs are not paying a lot of VAT, their customers are."<br /><br />VAT is largely borne by the supplier.<br /><br />"They, and their employees are, however, paying quite a bit in income tax and NI."<br /><br />Their employees are low paid, so not much in income tax and NIC.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-79396282409949501842016-11-02T19:51:07.639+00:002016-11-02T19:51:07.639+00:00"Some McDonald's restaurants are owned an..."Some McDonald's restaurants are owned and operated by McDonald's corporation itself"<br /><br />I don’t think that is the set up. McDs have set up two separate legal entities: McDonald’s Restaurants Limited with 35,879 employees which operates the owned restaurants in the UK and McD Franchising Europe, based in Luxembourg with 14 employees. I guess the whole UK operation is a franchise of the Luxembourg company. I don’t know which company franchises the actual franchised restaurants but I don’t think it matters.<br /><br />The Luxembourg company almost certainly doesn’t have any permanent establishments in the UK. The test then is the phrase “effectively connected”. Is McDonald’s Restaurants Ltd effectively connected with McD Franchising Europe? That seems a question for some very expensive lawyers to thrash out but the situation is more complicated than it would first appear.<br /><br />What is interesting is that McD Franchising Europe reported turnover of $1bn and profits of $540.6m last year from royalty payments generated around the region. Where did $460m go? It would seem they are paying royalties to somewhere.<br /><br />PS McDs are not paying a lot of VAT, their customers are. McDs are just unpaid tax collectors passing it on. They, and their employees are, however, paying quite a bit in income tax and NI.<br />KJPhttps://www.blogger.com/profile/07339137349962768014noreply@blogger.com