| Vodafone: Undercover investigation exposes Swiss branches Vodafone's accounts suggest it attributes billions of pounds in profit to branches in the tax haven of Switzerland – but an undercover investigation indicates hardly any business is done there. A common, legal tax avoidance technique used by companies based in Luxembourg is to attribute profit to a Swiss branch. The profits are likely to have been attributed to Switzerland. Vodafone said at the time that 'due to the facts established in this agreement', amendments to the CFC rules coming into force in 2012 would not generate a tax bill either. The Bureau and Private Eye visited the country to investigate whether any real business was being done there. The European Court of Justice said in 2006 that anti-evasion laws could kick in when schemes are 'wholly artificially arrangements which do not reflect economic reality, with a peruse to escaping the tax normally due'. Journalists posed as consultants with customers hoping to set up Swiss branches and were invited to a meeting with accountant Peter Graf on February 21, 2012. In response to the investigation's findings, Vodafone said it does not claim to have 'material activities or operations in Switzerland', that Vodafone's structure is totally transparent, and that the existence of the Swiss branches was examined by HMRC before reaching the settlement in 2010. Graf is a Vodafone employee based in an accountancy firm in Bern, who manages several Swiss branches of Vodafone's Luxembourg subsidiaries. Yet in 2010, when HMRC settled a tax dispute with Vodafone over the Luxembourg-Swiss structure, it agreed that British anti-evasion laws, known as the controlled foreign company (CFC) rules, would not apply from that point onwards. But the company refused to reply to questions on how it allocates its profits between Switzerland and Luxembourg, and why it maintains a Swiss bookkeeping office when it has so few business activities there. The revelations suggest the Swiss set-up is artificial and should not escape greater scrutiny from the British taxman. 5bn (£1. The accounts show that for one company, profits worth $2. 6bn) were taxed at less than 1% in 2011. Vodafone – which has its headquarters in the UK – publishes a single, combined set of accounts for its Luxembourg subsidiaries and their Swiss branches. An HMRC spokesman said: 'HMRC cannot comment on Vodafone's business arrangements, nor on how any such arrangements may be affected by the new controlled foreign company rules to be introduced in Finance Bill 2012. |
Wednesday, 7 March 2012
Vodafone: Undercover investigation exposes Swiss branches
