Vodafone tax write-off plans cause political uproar

8 Jun 2004

The Vodafone Group is causing a political storm in the North-Rhine Westphalia region of Germany over its attempts to offset its future tax liabilities with a EUR50 billion write-down on the value of its German business. The UK telco wants to use ‘loss carry forwards’ to save as much as EUR20 billion on the tax it pays on future profits. However, the move has angered politicians who claim that such an action would essentially leave taxpayers footing the bill for Vodafone’s hostile takeover of German telco Mannesmann in 2000. A spokesman for North-Rhine Westphalia’s Ministry of Finance has said that while Vodafone’s tax write-off plans are in line with legislation in force at the time of the takeover, the decreased value of the assets in question had to be shown to be permanent. It added that ‘mere share price swings are not sufficient’.