Vodafone Makes This Big Tax Settlement
Back in 2009, Vodafone Group (NASDAQ:VOD) paid millions to settle a tax dispute with the British tax authority Her Majesty’s Revenue and Customs related to the company’s Irish subsidiary used to collect royalty payments, the U.K. newspaper the Guardian reported on Sunday. According to the Guardian’s report, Vodafone created the Irish subsidiary Vodafone Ireland Marketing Ltd. to collect royalty payments from Vodafone’s ventures around the world. The company had no employees between 2002 and 2007, but was bringing in close to $508 million a year.
The company, like others before it including Apple (NASDAQ:AAPL), created the subsidiary to take advantage of Ireland’s low corporate tax rate. Irish corporate tax takes between 12 and 25 percent of profits, while U.K. corporate tax between 2008 and 2010 was 28 percent.
Accounts filed in Dublin seen by the Guardian showed that HMRC settled with Vodafone over the dispute in 2009. The amount of the settlement has not been disclosed, but as part of the settlement Vodafone was forced to reclaim over $89 million in taxes from the Irish to give to the U.K. According to the Guardian’s report, Vodafone confirmed that the settlement had not been disclosed in its financial statements, but in a separate report from Reuters, the company claims the settlement was included in its annual reports.