Treasury will have to return Vodafone 220 million for improper IAE fees | Companies

The Treasury will have to return €219.8 million to Vodafone Spain for amounts wrongfully collected from the IAE tax in its annual tax assessments from 2013 to 2022. This return is in accordance with the cataract rulings of the Supreme Court. The court struck down the calculation of this tax for telecommunications companies because it found it contrary to the Community Directive to allow telecommunications networks and services. electronics. This was quantified by Vodafone Spain in the reports for the last financial year (1 April 2023 to 31 March 2024) submitted to the Commercial Register and to which this newspaper had access.

Of the total amount of this debt, the operator admits that under this concept it has already calculated a financial income of 53.8 million euros after the Supreme Court verdicts handed down over several years have become final, for which the Treasury will still have to pay about 136 million euros Euro.

The first Supreme Court decision was made in July 2022 and invalidated Vodafone’s $29.8 million payment to IAE for the 2013 financial year. This ruling gave rise to a number of rulings of a similar nature, agreed not only with Vodafone, but also with other operators such as Telefonica, Orange, MásMóvil and Digi.

The problem arose as a result of legislation passed in late 2002 that amended the Local Treasury Act and established a new system for quantifying IAE for mobile telephony, based on the number of mobile antennas together with an existing parameter. the existing number of clients, which has also increased. This reform pursued only the goal of increasing revenues, without any legal justification, as subsequent court decisions indicated. Proof of this is that over the years the reform has increased the tax almost tenfold. A 2020 ruling by the Court of Justice of the European Union (CJEU) found that this IAE statement was contrary to the European Electronic Communications Networks and Services Directive. The operators went to court, which ruled in their favor, and the government had no choice but to change the calculation of the tax in the general budgets for 2023.

Vodafone Spain tallied all of these tax revenues in its accounts for its most recent financial year, 2023-2024, when the company was still 100% owned by the UK Vodafone group through Vodafone Holding Europe, which includes all the subsidiaries they operate. in Spain (Vodafone España, Vodadone Ono, Vodafone Servicios and Vodafone Energía). The accounts were closed on March 31, 2024, two months before the sale of Vodafone Holdings Europe to Zegona took place.

The dispute is not limited to Vodafone, as the Supreme Court has overturned settlement agreements filed by the remaining companies.

Protection from Zegona

In addition to tax disputes, the financial statement discloses a defense mechanism in favor of Vodafone Group in the event that Zegona is unable to fulfill the obligations it assumed when acquiring Vodafone Spain. Thus, according to a document accessed by this newspaper, as part of the acquisition agreement executed on May 31, 2024, all credit agreements that Vodafone Holdings Europe (the parent company of all Vodafone companies in Spain) had with the British Vodafone Group were liquidated at the expense of funds provided by new loan agreements with Zegona.

The main mechanism for the payment of 5,000 million is a loan of 3,400 million euros with a final maturity date of 31 January 2029, for which no principal repayments are scheduled until the end of the first 24 months of the term. Regarding this loan, refinanced by Zegona in July last year, the financial statement states that on July 8, the British group formally executed “collateral agreements” for the shares of Vodafone Spain “and, if necessary, for the loan rights derived from certain contracts or certain bank accounts.” That is, in the event of default, Vodafone Group could return part of the capital of the sold Spanish subsidiary or the rights to loans provided by Zegona.

To assess the ability to repay this loan, compliance covenant a financial agreement under which Zegona undertakes to maintain certain financial ratios of the operator at certain levels during the term of the loan, the first measurement of which will be carried out on March 31, 2025.

Vodafone Spain’s current managers declined to comment. “These statements include the financial results for the financial period (1 April 2023 to 31 March 2024) during which Vodafone Spain was still fully integrated into the Vodafone group. As of May 31, 2024, Zegona completed the acquisition of Vodafone Spain and separated it from the Vodafone Group,” a company spokesperson said.

.