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BRUSSELS—McDonald's Corp. on Thursday said a large portion of its non-U.S. income would be taxed in the U.K. following a restructuring that shifts operations away from Luxembourg amid a probe by the European Union competition authority over its tax arrangements.

McDonald's said it had created a U.K.-based international holding company that would have "responsibility for the majority of royalties received from licensing the company's global intellectual property rights outside the United States." It added in a statement that the profits of the new international holding company would be subject to U.K. corporation tax.

The Luxembourg office will retain responsibility for restaurants in the country, but other functions will transfer to the U.K holding company, McDonald's said.

The move comes as the European Commission, the EU's executive arm, investigates the company's tax affairs in Luxembourg. The commission, which opened the probe last December, alleges that a deal Luxembourg granted the fast-food chain in 2009 may have illegally reduced its tax burden and breached competition rules.

Brussels could order the fast food giant to pay back as much as €1.5 billion ($1.6 billion) in unpaid taxes between 2009 and 2015 to Luxembourg, according to an October statement by U.S. and European trade unions, which based its information largely on the company's public financial statements.

McDonald's says it received no special treatment and paid all taxes it owes. On Thursday, the company said it paid more than $2.5 billion in corporate taxes in the EU between 2011 and 2015.

McDonald's said it chose the U.K. for its new holding structure because of the language, connections to other markets and the large number of staff working there. The fast food company said the new structure would help reduce expense and support future growth plans, particularly those around refranchising projects.

U.K. tax authorities are also scrutinizing McDonald's, according to a company filing uploaded on a government website. In the report, McDonald's said it has set aside £ 11.5 million ($14.5 million), in relation to discussions with the British tax authorities "in an ongoing transfer pricing review initiated in 2011 covering the years since 2009."

McDonalds's move is the latest from multinational corporations that are rearranging their legal structures to keep up with a global shake-up in tax rules.

There have been efforts by governments, particularly in Europe, to wring more revenue from multinationals that shift profits to jurisdictions where they are subject to little or no income tax. This is often done by paying intra-company royalties that reduce taxable income in certain countries.

In 2015, Amazon.com Inc., which is also under investigation by the EU, changed its European structure so it would collect customer revenue from subsidiaries in additional member countries, instead of funneling it all through Luxembourg. The company has said it received no special treatment from Luxembourg.

Other companies have changed their structures, too.

In April, Facebook Inc. began directing big U.K. clients to start writing their checks to a Facebook affiliate in the country, rather than funneling that revenue through low-tax Ireland and then on to the Cayman Islands. Plus, Alphabet Inc.'s Google said in January that it would start attributing some revenue from Google clients in the U.K. to its local unit.

Both companies' moves are expected to boost income taxes paid in the U.K.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com

(END) Dow Jones Newswires

December 08, 2016 11:15 ET (16:15 GMT)

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