Vodafone 2012 Annual Report Download - page 158

156
Vodafone Group Plc
Annual Report 2012
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 xed 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ruling by the European Court of Justice has determined that the 1.5%
SDRT charges on issue of shares to a clearance service is contrary to EU
law. As a result of that ruling, HMRC indicated that where new shares are
rst issued to a clearance service or to a depositary within the European
Union, the 1.5% SDRT charge will not be levied. Subsequently, a recent
decision by the rst-tier tax tribunal in the UK extended this ruling to the
issue of shares (or, where it is integral to the raising of new capital, the
transfer of shares) to depositary receipts systems wherever located.
HMRC have stated that they will not seek to appeal this decision and,
assuch, will no longer seek to impose 1.5% SDRT on the issue of shares
(or, where it is integral to the raising of new capital, the transfer of shares)
to a clearance service or to a depositary, wherever located. Investors
should, however, be aware that this area may be subject to further
developments in the future.
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 qualied dividend income for
certain non-corporate holders.
Backup withholding and information reporting
Payments of dividends and other proceeds to a US holder with respect
to shares or ADSs, by a US paying agent or other US intermediary will be
reported to the Internal Revenue Service (‘IRS’) and to the US holder as
may be required under applicable regulations. Backup withholding may
apply to these payments if the US holder fails to provide an accurate
taxpayer identication number or certication of exempt status or
failsto report all interest and dividends required to be shown on its US
federal income tax returns. Certain US holders are not subject to backup
withholding. US holders should consult their tax advisers as to their
qualication for exemption from backup withholding and the procedure
for obtaining an exemption.
Foreign nancial asset reporting
Recently enacted legislation imposes new reporting requirements on
US holders with respect to the holding of certain foreign nancial assets,
including equity of foreign entities, if the aggregate value of all of these
assets exceeds US$50,000. The shares and ADSs are expected to
constitute foreign nancial assets subject to these requirements unless
the shares and ADSs are held in an account at a nancial institution (in
which case, the account may be reportable if maintained by a foreign
nancial institution). US holders should consult their tax advisors
regarding the application of this legislation.
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Shareholder information (continued)