Although one of the biggest mobile phone corporations in the world – one which is bound to have a weighty professional indemnity insurance policy – the verdict of a recent lawsuit shows that Vodafone is still subject to European tax laws.
The company has agreed to pay $1.93 billion (£1.25 billion) to settle a taxation lawsuit over units based in European countries outside of the UK. In its biggest settlement deal to date, HM Revenue & Customs will receive £800 million of the total during this financial year, with the rest being paid in instalments over five years.
The lawsuit was brought against British-based Vodafone under the controversial and complicated Controlled Foreign Companies (CFC) laws, which applied to the company’s Luxemburg unit. These laws relate to companies with units in EU countries with lower tax rates.
Despite the huge payout, Vodafone are said to be satisfied with the outcome of the dispute, which has been on-going for nearly a decade. A statement from the company said:
“No further U.K. CFC tax liabilities will arise in the near future under current legislation,”
“Longer term, no CFC liabilities are expected to arise as a consequence of the likely reforms of the U.K. CFC regime.”