Vodaphone and HMRC Reach Deal on Irish Tax Case
It has recently emerged that HMRC and Vodaphone have reached a high-value agreement on a previously undisclosed tax dispute. The mobile phone company was using an Irish subsidiary to collect royalty payments. This was formed the key step in a process by which millions of pounds of profit were redirected to Luxembourg, a jurisdiction with very low tax.
The subsidiary in question, Vodaphone Ireland Marketing, did not hire any new employees between 2002 and 2007. In spite of this, it was the receptacle for royalty payments from most countries in which Vodaphone had business interests.
Vodaphone has denied claims of tax avoidance, stating that the settlement was a result of “a number of technical factors regarding inter-group transfer pricing arrangements.”
The exact figure has not been disclosed, but it has been revealed that approximately £57 million tax were reclaimed from the Irish government in relation to the case.