A Senate report, published on March 17, highlighted the growing influence of consulting firms on public policy, with the proliferation of contracts in recent years.
Among them, the firm McKinsey, which notably advised the government on the vaccination campaign, would not have paid taxes between 2011 and 2020, according to the commission of inquiry, considering that it is "a caricatural example of tax optimization”.
At the same time, the Senate took legal action for "suspicion of false testimony" against a manager of a French subsidiary of McKinsey, who had assured during a hearing that the firm paid corporate tax in France.
“If there is proof of manipulation, let it go to the criminal!
It is with this sentence that Emmanuel Macron, accused of having multiplied contracts with consulting companies since his election, responded to his detractors.
At the center of the controversy: the firm McKinsey, hired in particular to advise the government on the vaccination campaign.
According to a Senate commission of inquiry, French entities of the American firm McKinsey did not pay corporate tax in France between 2011 and 2020. What are we talking about exactly?
Is this tax evasion?
What are the legal consequences?
20 Minutes
takes stock to allow you to see more clearly.
What is the “McKinsey Affair”?
The case is part of a report published on March 17 by the Senate inquiry committee on the growing influence of consulting firms on public policy.
According to the senators' investigations, government spending in the area more than doubled in 2021, with 893.9 million euros paid by ministries to consulting firms, compared to 379.1 million euros in 2018, for contracts signed before Emmanuel Macron's five-year term.
Among these firms is McKinsey, an American company which has several subsidiaries in France, including the two main “McKinsey & Company Inc. France and McKinsey & Company SAS”.
The latter have been requested by the State for various advisory missions, in particular on the reform of the APL, the reform of pensions or more recently on the management of the coronavirus.
During the health crisis, the government would have spent more than 12 million euros to offer McKinsey's advice on the vaccination campaign, say the senators, who accuse the cabinet of tax optimization.
The subsidiaries of the American company would not have paid any corporate tax in France between 2011 and 2020, while their turnover in the territory reached "329 million euros in 2020, of which approximately 5% in the public sector,” the Senate said.
"The McKinsey firm is subject to corporation tax (IS) in France but its payments have been at zero euros for at least 10 years", denounced the Commission of Inquiry in its report.
What is the "transfer price" of which the company is suspected?
According to the commission of inquiry, this is “a caricatural example of tax optimization”.
And the mechanism used by the firm is fairly well known and frequently used by multinationals, according to Vincent Drezet, tax specialist at the Association for the taxation of financial transactions and for citizen action (ATTAC): this is called "transfer pricing ".
“The parent company, which is located in a territory with privileged taxation – for McKinsey in Delaware in the United States, – invoices goods or services to its subsidiaries located in less tax-advantaged territories.
This transfer price constitutes a charge for the subsidiaries, which reduces their profits, ie their tax result.
By reducing their tax result, they reduce the amount of their tax,” explains the analyst.
Our file on tax evasion
If the "transfer price" is legal, the entities must respect competitive prices: "The services within the same group must not be reduced or increased", continues Aïda Kammoun, tax lawyer at Villaret. Lawyers.
“If it's billed at the real price, it's tax optimization and it's legal.
If the price is increased, it is fraud.
The last option is that the services invoiced do not exist, therefore phantom services, and there too it is fraud", indicates Vincent Drezet, before completing: "According to the OECD and the European Commission, transfer pricing represents about half of world trade, it's colossal”.
What is the McKinsey firm risking?
The challenge now for the tax authorities is to verify that McKinsey has assessed these transfer prices “at their fair value”.
If the price paid by McKinsey France to the parent company in the United States is too high, "there may be a tax adjustment", that is to say a catch-up of taxes that have not been paid, deciphers Vincent Drezet.
“In addition to the adjustment, the company can have penalties of 40 to 80% of the amount of the tax.
It can be a deterrent,” adds the tax expert.
But it's not just tax penalties.
Since 2019, and the lifting of the "Bercy lock", the tax administration has the obligation to report tax adjustments of more than 100,000 euros to the courts.
“If the amount is higher, the tax administration transfers the file to the prosecution, which decides whether or not to prosecute for tax evasion,” explains Aïda Kammoun.
But for proceedings to be instituted for tax evasion, "there must be two conditions: a tax that has not been paid and the deliberate intention of having wanted to defraud", says the lawyer.
For Vincent Drezet, there could also be a judicial convention of public interest (CJIP), as for Google in 2019. This procedure allows the public prosecutor not to initiate criminal proceedings against a company if it concludes an agreement which includes several measures: acknowledgment of the facts, collaboration with the justice system, implementation of remedial measures, payment of a fine, and compensation for victims.
Why did the Senate take legal action for "suspicion of false testimony"?
In addition to the tax component, the Senate took legal action for "suspicion of false testimony" against Karim Tadjeddine, the head of the public sector division of McKinsey, who had assured, in mid-January before the commission of inquiry, that the firm was paying well corporate tax in France.
"I say it very clearly: we pay corporate tax in France and all salaries are in a company governed by French law which pays its taxes in France", he declared, while the report asserts that the company paid no tax between 2011 and 2020.
It will now be up to the public prosecutor to decide whether or not to prosecute the manager of the company.
Politics
McKinsey: No, Gabriel Attal did not claim that the consulting firm paid its taxes in France because it paid VAT
Politics
McKinsey affair: Bruno Le Maire assures that the McKinsey firm will pay the taxes "it owes to taxpayers"
Justice
Bruno the Mayor
Taxation
tax evasion
Advice
Senate
Contract
Investigative committee
Taxes
0 comment
0 share
Share on Messenger
Share on Facebook
Share on Twitter
Share on Flipboard
Share on Pinterest
Share on Linkedin
Send by Mail
To safeguard
A fault ?
To print