Vodafone, the British mobile phone giant, refunded
an estimated €67m to the UK's Revenue & Customs
after the discovery of an Irish tax haven deal that enabled the group on
receipt of royalties at a shell company in Dublin, to transfer over €1bn in
dividends to low-tax Luxembourg.
The Guardian newspaper reported on Sunday that in the period 2002-2007,
Vodafone used an Irish registered company to collect hundreds of millions of
pounds a year in royalty payments from operating companies and joint ventures
around the world.
The company was similar to arrangement disclosed
by a US
Senate panel last May, that Apple used Irish shell companies to transfer large
multi-billion dollars sums to avoid payment of taxes.
The Apple disclosures triggered denials by the Irish Government
was a tax haven. However, a letter to the leading senators on the Senate
Permanent Subcommittee on Investigations, received a swift smackdown:
Carl Levin and Senator John McCain, responded to the Irish letter by saying:
people would agree that negotiating special tax arrangements that allow
companies to pay little or no income tax meets a common-sense definition of
a tax haven."
Irish Government's foolish tax letter to US senators
Vodafone made a settlement in 2009 with Her Majesty's Revenue & Customs
(HMRC) but it kept the settlement secret.
The overall size of the settlement has not been revealed but it involved
Vodafone reclaiming €67m from the Irish government in tax that should have been
paid in the UK, the Guardian reported.
By 2007, Vodafone Ireland Marketing Ltd (VIML), a company registered to an
industrial estate in the Dublin suburb of Leopardstown, was reporting a turnover
of €380m (£320m) a year.
During a four-year period, these royalty payments, collected from most countries
except the UK and Italy, had helped Vodafone send more than €1bn worth of
dividends to the low tax jurisdiction of Luxembourg from Dublin. The dividends,
which include a final payment of €142m due to be delivered this year,
came from profits made after taking advantage of Ireland’s low corporation tax
By 2007, Vodafone decided to move some staff to Dublin
when it appeared
that the HMRC became aware of the arrangement.
Throughout the period covered by the settlement, the profits of VIML had been
taxed by the Irish authorities at the rate of 25%, the UK-based mobile phone
In accordance with the Treaty between the UK and Ireland which prevents
double taxation on the same income, the Irish government credited taxes
previously paid by Vodafone and these were then paid to the UK Treasury as part
of the overall settlement, the company added.
The Guardian said: "The Irish accounts illustrate one important advantage: if
the firm could show it was "carrying out trading activities" from Dublin, the
corporation tax rate would be halved.
According to the 2008 company filings: "Following the establishment of the
global brand management function in Ireland the activities of the company have
increased. A confirmation has been obtained from the Irish Revenue that the
company is now carrying out trading activities and, accordingly, subject to the
corporate tax rate of 12.5%." The rate would apply from 1 November 2007."
Check out our
, at a low annual charge of €25