Taking a page from technology companies, fast food corporations have figured out how to avoid paying U.S. taxes by using an intellectual property loophole in foreign countries.

What McDonalds and Burger King do is classify food items, like the Whopper, as intellectual property and charge franchises a fee to sell them. But instead of collecting the fees in the U.S., where the Internal Revenue Service would demand taxes, the fast food operations house the fees in low-tax countries, like Switzerland.

The scheme has allowed Burger King to pay the Swiss an effective tax rate of 2% to 12%, instead of a 35%-39% rate in the U.S.

Subway follows a similar strategy, only it uses Curaçao in the Caribbean to stash its IP-related monies.

-Noel Brinkerhoff

To Learn More:

Fast Food Chains Use Loopholes And Low-Tax Countries To Avoid Millions In Taxes Each Year (by Travis Waldron, Think Progress)

Fast Food, Tax Lite (by Tom Bergin, Reuters)