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Vodafone made a settlement potentially worth millions with HMRC to end a dispute about the amount of tax paid by one of the telco's Irish subsidiaries.

The deal was outed after The Guardian said yesterday that accounts filed in Dublin showed the Irish firm, Vodafone Ireland Marketing Ltd (VIML), settling up with HMRC in 2009.

The size of the payment hasn't been verified, but the paper claimed that it involved Vodafone reclaiming £57m in tax from the Irish government that should have been paid in the UK.

The mobile operator said in a statement that the settlement "related to a number of technical factors regarding intergroup transfer pricing arrangements".

"Notably, throughout the period covered by the settlement, the profits of VIML had been taxed by the Irish authorities at the rate of 25 per cent," the firm claimed. "In accordance with the treaty between the UK and Ireland which prevents double taxation on the same income, the Irish government credited taxes previously paid by Vodafone and these were then paid to the UK Treasury as part of the overall settlement."

Vodafone Group claimed that its "brand activities" were no longer located in Ireland and had moved to the UK towards the end of 2011.

The group, which is the second largest mobile company in the world by revenue, hasn't paid any corporation tax in Britain for two years, although it paid £2.6bn of international taxes last year.

Like Amazon and Google, which have also been the subject of scrutiny over the amount of tax they pay in Blighty, Vodafone insisted it was fully compliant with existing tax laws.

The OECD suggested an action plan last month to totally shake up international taxation laws, including double taxation rules, many of which have been around since the 1920s. The plan, backed by the G20, would attempt to close off loopholes that have been exploited by multinationals to move profits into low tax jurisdictions - or just make them magically disappear. ®

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