Consulting firm McKinsey accused of tax evasion in France

McKinsey is the dominant player in strategy consulting in France. He carries out many missions for the government. CHARLES PLATIAU / REUTERS McKinsey was the subject of heated controversy in early 2021 when the involvement of its consultants in the management of the Covid-19 pandemic came to light. A year later, the prestigious American consulting firm is again in turmoil, this time for accusations of aggressive tax optimization. “La Firme”, as it is nicknamed, has not paid any corporate tax in France for ten years, according to the report of the Senate commission of inquiry on consulting firms, made public on Thursday March 17, and of which Le World took notice. This revelation is all the more embarrassing, in light of the statement made by one of its leaders during his hearing with the senators on January 18: “I say it very clearly: we pay tax on companies in France”, testified, under oath, Karim Tadjeddine, the head of the public sector pole of McKinsey. An assertion in contradiction with the information obtained by the commission of inquiry from the tax administration, which led the senators to seize the prosecutor on the case of Mr. Tadjeddine. False testimony before a commission of inquiry is punishable by five years’ imprisonment and a fine of 75,000 euros. Thanks to their extended powers, the senators were able to continue the investigation In February 2021, Le Monde had revealed that the French branch of McKinsey actually operated from a structure based in the State of Delaware (United States), the main paradise US tax system for corporations, characterized by zero taxation and great financial opacity. Without being able to detail the tax mechanisms used by the company, for lack of transparency on its accounts. Thanks to their extended powers, the senators were able to continue the investigation, by going directly to Bercy to recover documents relating to McKinsey & Company Inc France and McKinsey & Company SAS, the two main French entities of the firm, over the period 2011 to 2020. Conclusion: McKinsey is technically subject to corporation tax. But can we really say that he “paid” for it? He did not pay a penny for this between 2011 and 2020, the senators found. And this while the French turnover of the firm was 329 million euros in 2020, of which 5% in the public sector, for six hundred employees. Tax optimization prized by many multinationals To achieve this result, McKinsey uses a tax optimization mechanism prized by many multinationals: the declaration of the “transfer prices” of its entities in France to the parent company based in Delaware. In concrete terms, the firm deducts from its taxable profits in France numerous costs billed to other group entities located abroad, as if they were service providers. General administration costs, use of the brand, internal assistance within the network, provision of personnel… So many expenses which appear as expenses in the company’s accounts, and allow the firm to reduce its corporate tax to zero. You have 49.39% of this article left to read. The following is for subscribers only.