European Competition Commissioner Margrethe Vestager could announce the investigation by today following on the heels of other recent cases, including alleged deals between Ireland and Apple.
In October, Vestager ordered the Dutch government to claw back up to €30m in back taxes from US coffee chain Starbucks and told Luxembourg to do the same for Fiat Chrysler Automobiles.
Cases against Apple’s Irish tax deal and Amazon’s arrangement in Luxembourg are also pending.
Labour unions and the charity War on Want, have accused McDonald’s of avoiding around €1bn in tax between 2009 and 2013 by routing revenue through a Luxembourg unit and have called for EU regulators to take action against the US fast-food chain.
McDonald’s, in a statement, said it had not been told of any EU investigation and that it complies with all tax laws and rules in Europe.
“From 2010-2014, the McDonald’s companies paid more than $2.1bn just in corporate taxes in the European Union, with an average tax rate of almost 27%.
“Additionally, we pay social, real estate and other taxes.
"Our independent franchisees, who own and operate approximately 75%of our restaurants in Europe, also pay corporate tax and many other taxes,” the company said.
Corporate tax avoidance has become a hot political issue in Europe.