Vodafone in multi-million tax settlement -report

Aug 18 (Reuters) - Vodafone Group paid millions toBritain's tax authority as part of a settlement linked to itsIrish unit, the Guardian reported on Sunday.

The Guardian reported that accounts filed in Dublin showedthat in 2009 Her Majesty's Revenue and Customs (HMRC) settled adispute with the British telecoms provider over its Irish taxreturns. ().

The overall size of the settlement has not been revealed butit involved Vodafone reclaiming 67 million euros ($89.33million) from the Irish government in tax that should have beenpaid in the UK, the Guardian reported.

"Vodafone conducts itself in full compliance with the lawand always operates under a policy of full transparency with thetax authorities in all countries in which we operate," thecompany said in statement in response to the article.

Vodafone has come under criticism in recent years fromcampaigners after it said it had not paid any corporation tax inBritain for two years due to tough operating conditions in itshome market.

The Guardian said that Vodafone used an Irish subsidiary,Vodafone Ireland Marketing Ltd (VIML), to collect royaltypayments from operating companies and joint ventures around theworld for using its brand.

The Guardian reported that during a four-year period, theseroyalty payments, collected from most countries except the UKand Italy, have helped Vodafone send more than 1 billion eurosworth of dividends to the low tax jurisdiction of Luxembourgfrom Dublin.

Vodafone said in its statement that the settlement with HMRCrelated to a number of technical factors regarding inter-Grouptransfer pricing arrangements.

Notably, throughout the period covered by the settlement,the profits of VIML had been taxed by the Irish authorities atthe rate of 25%, the UK-based mobile phone group said.

In accordance with the Treaty between the UK and Irelandwhich prevents double taxation on the same income, the Irishgovernment credited taxes previously paid by Vodafone and thesewere then paid to the UK Treasury as part of the overallsettlement, the company added.

Vodafone said this was disclosed in its annual report andaccounts.