Vodafone to fight £2.5bn tax bill

Vodafone will continue to fight off efforts by HM Revenue & Customs to
impose a £2.5bn tax bill on the business.

Arun Sarin, Vodafone’s chief executive, told the FT that this
month’s ruling by the European Court of Justice on a case brought by Cadbury
Schweppes was ‘very helpful’ for the group’s dispute with tax authorities over
the tax treatment of a Vodafone subsidiary in Luxembourg.

Last week the ECJ said that placing subsidiaries in low tax jurisdictions
should be allowed as long as the subsidiary was conducting genuine economic

Vodafone is facing potential tax liabilities running into the billions
because of Luxembourg subsidiary, but the controlled foreign company ruling by
the ECJ will help Vodafone fight off the attentions of HMRC.

Speaking at a conference in New York Sarin said: ‘Obviously the Cadbury case
is a very helpful case for the Vodafone case that will be heard next year. We
are feeling good about what might happen with us next year in this particular

The company has put aside £2.5bn to pay the tax charge should it lose a case
that comes before the ECJ next year. A UK tax tribunal that adjudicated the case
last referred some of the issues to the European Court.

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