(sth/las) – The Luxembourg division of Vodafone made a profit before taxes of some 1.6 billion euros (1.4 billion pounds) in
The UK telecommunications provider paid 7 million euros of direct taxes in the Grand Duchy, down from 22.3 million euros in 2015.
The 1.6-billion-euro profit before taxes represents 86% of the company's global profits before taxes.
published these numbers in its report on “taxation and our
total economic contribution to public finances” for the 2015-16
The company has been publishing the annual reports for the past five years after coming under fire from the UK's HMRC in a dispute that resulted in a final settlement of 1.25 billion pounds.
The report reveals that
the company's subsidiary in Luxembourg, while generating just 164 million pounds in revenues, produced a profit before taxes of nearly 1.4
Explaining the discrepancy between revenues and profit, a company spokesman said: "The revenue we generate in Luxembourg is from activities we handle for third parties, whereas the profits are generated from activities we manage for the whole of Vodafone Group, including financing, procurement and roaming."
Vodafone's tax report, in the chapter entitled "Vodafone,
Luxembourg and 'tax havens'", takes pains to emphasise that its "subsidiaries in
Luxembourg are not 'brass plate' companies".
The Vodafone Procurement Company based in Luxembourg "oversees more than 18 billion euros of global purchasing contracts".
Other investments in Luxembourg and around the world
Vodafone's report goes on to mention other means of "contribution to
Indirect government revenue contributions such as national insurance contributions for employees, withholding taxes,
sales and consumption taxes and VAT amount to
11 million pounds, according to the report.
The company also lists capital investments (35 million pounds in Luxembourg) and direct employment, totalling 107,667 employees around the world (317 in Luxembourg).
Vodafone pays 0.4% of direct taxes in Luxembourg, a direct
consequence of the company's acquisition of the German firm
Mannesmann in 2000, whose value dropped dramatically following the
This loss ('good will'), which can be written off in Luxembourg, according to the report, stood at 26.5 billion euros in 2014.
Luxembourg's 2017 tax
reform will set a time limit to these kinds of write-offs in the
future, according to the report.
UK authorities additionally introduced new regulations taxing credits the company receives in Luxembourg.