THE SUBSTANTIAL SHAREHOLDING EXEMPTION CAN HELP SMES
By Richard Mannion
Vodafone's recent announcement that it has disposed
of one its subsidiaries, Verizon Wireless, for £84bn has led
to some confusion about whether it has avoided the payment of tax
in the UK on the capital gain.
The Verizon Wireless stake is in fact held by a Dutch subsidiary
and Vodafone will benefit from a tax exemption on disposals in
Dutch legislation, although reports indicate that a tax charge of
approximately £5bn will crystallise in USA.
That structure means that no tax is payable in the UK, but even
if the stake had been owned by a company resident in the UK, no tax
would have been payable on the gain because of what is known as the
'substantial shareholding' exemption.
