Vodafone in multimillion tax deal over Irish office
Vodafone made a multi-million pound settlement with HM Revenue & Customs in 2009 in the wake of a dispute over the tax it had paid in Britain.
The information was revealed after it was reported that the company ran an Irish subsidiary from a satellite office in Dublin for tax purposes.
The Guardian reported that Vodafone used the Irish subsidiary, which employed no staff between 2002 and 2007, to collect royalty payments from operating companies and joint ventures around the world.
During a four-year period, it emerged these royalty payments helped Vodafone Ireland Marketing Ltd send more than £850million worth of dividends to the low-tax jurisdiction of Luxembourg from their Dublin base.
The dividends, which include a final payment of £121million due to be delivered this year, came from profits made after taking advantage of Ireland’s tax rates.
The Guardian reported that Vodafone moved senior marketing managers to Dublin to protect global royalty revenues from UK taxation, and trigger a lower Irish corporation tax bill from 25 per cent to 12.5 per cent of profits.
This was significantly lower than the UK rate, which was 28 per cent of profits between 2008 and 2010.
Accounts filed in Dublin show that in 2009, the HMRC settled a dispute with Vodafone over its Irish tax returns.
The overall size of the settlement has not been revealed, but it involved Vodafone reclaiming £57 million from the Irish Government in tax that should have been paid in the UK.
Vodafone, the world’s second largest mobile phone company by revenue, has paid no corporation tax in Britain for two successive years, despite paying £2.6 billion in international taxes in 2012.
The company confirmed to the Guardian that its settlement had never been separately disclosed in its annual reports, and was not connected to a £1.25 billion payment to the British revenue in 2010, to settle a much-publicised dispute over the use of a Luxembourg subsidiary.
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