Vodafone 2010 Annual Report Download - page 133

Vodafone Group Plc Annual Report 2010 131
Additional information
Additional tax considerations
UK inheritance tax
An individual who is domiciled in the United States (for the purposes of the Estate Tax
Convention) and is not a UK national will not be subject to UK inheritance tax in
respect of our shares or ADSs on the individual’s death or on a transfer of the shares
or ADSs during the individual’s lifetime, provided that any applicable US federal gift
or estate tax is paid, unless the shares or ADSs are part of the business property of a
UK permanent establishment or pertain to a UK fixed base used for the performance
of independent personal services. Where the shares or ADSs have been placed in
trust by a settlor they may be subject to UK inheritance tax unless, when the trust was
created, the settlor was domiciled in the United States and was not a UK national.
Where the shares or ADSs are subject to both UK inheritance tax and to US federal
gift or estate tax, the estate tax convention generally provides a credit against US
federal tax liabilities for UK inheritance tax paid.
UK stamp duty and stamp duty reserve tax
Stamp duty will, subject to certain exceptions, be payable on any instrument
transferring our shares to the custodian of the depositary at the rate of 1.5% on the
amount or value of the consideration if on sale or on the value of such shares if not
on sale. Stamp duty reserve tax (‘SDRT’), at the rate of 1.5% of the price or value of the
shares, could also be payable in these circumstances and on issue to such a person
but no SDRT will be payable if stamp duty equal to such SDRT liability is paid. A recent
ruling by the European Court of Justice has determined that the 1.5% SDRT charge
on issue to a clearance service is contrary to EU law. HMRC have indicated that where
new shares are first issued to a clearance service or to a depositary within the
European Union, the 1.5% SDRT charge will not be levied. However to the extent that
the clearance service or depositary is located outside the European Union, HMRC
have indicated that such charge would still apply. In accordance with the terms of the
deposit agreement, any tax or duty payable on deposits of shares by the depositary
or the custodian of the depositary will be charged to the party to whom ADSs are
delivered against such deposits.
No stamp duty will be payable on any transfer of our ADSs provided that the ADSs
and any separate instrument of transfer are executed and retained at all times outside
the United Kingdom. A transfer of our shares in registered form will attract ad valorem
stamp duty generally at the rate of 0.5% of the purchase price of the shares. There is
no charge to ad valorem stamp duty on gifts.
SDRT is generally payable on an unconditional agreement to transfer our shares in
registered form at 0.5% of the amount or value of the consideration for the transfer,
but is repayable if, within six years of the date of the agreement, an instrument
transferring the shares is executed or, if the SDRT has not been paid, the liability to
pay the tax (but not necessarily interest and penalties) would be cancelled. However
an agreement to transfer our ADSs will not give rise to SDRT.
PFIC rules
We do not believe that our shares or ADSs will be treated as stock of a passive foreign
investment company (‘PFIC’) for US federal income tax purposes. This conclusion is
a factual determination that is made annually and thus is subject to change. If we are
treated as a PFIC, any gain realised on the sale or other disposition of the shares or
ADSs would in general not be treated as capital gain unless a US holder elects to be
taxed annually on a mark-to-market basis with respect to the shares or ADSs.
Otherwise a US holder would be treated as if he or she has realised such gain
and certain “excess distributions” rateably over the holding period for the shares
or ADSs and would be taxed at the highest tax rate in effect for each such year to
which the gain was allocated. An interest charge in respect of the tax attributable to
each such year would also apply. Dividends received from us would not be eligible
for the preferential tax rate applicable to qualified dividend income for certain
non-corporate holders.