158 Vodafone Group Plc Annual Report 2026
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Factors affecting the tax expense in the year The table below explains the differences between the expected tax expense, being the aggregate of the Group’s geographical split of profits multiplied by the relevant local tax rates and the Group’s total tax expense for each year. 2026 2025 2024 €m €m €m Continuing profit/(loss) before tax as shown in the consolidated income statement 1,864 (1,478) 1,620 Profit/(loss) at weighted average statutory tax rate 439 (729) 363 Impairment loss with no tax effect 1 – 1,361 – Disposal of Group investments 2 85 146 174 Effect of taxation of associates and joint ventures, reported within (loss)/profit before tax 105 28 23 Previously unrecognised temporary differences and losses expected to be used in the future 3 – – (1,021) Previously recognised temporary differences and losses no longer expected to be used in the future 4 358 25 – Current year temporary differences (including losses) that are not expected to be used 60 33 84 Adjustments in respect of prior year tax liabilities 37 (108) 89 Impact of tax credits and irrecoverable taxes 97 108 147 Deferred tax on unremitted earnings and outside basis (40) 27 1 Effect of current year changes in statutory tax rates on deferred tax balances 5 305 721 (19) Settlement of the VISPL tax cases – 185 – Financing costs and similar not deductible for tax purposes 105 137 214 Revaluation of assets for tax purposes in Türkiye 6 87 128 (65) Expenses not deductible for tax purposes 167 184 60 Income tax expense 1,805 2,246 50 Notes: 1. The amount in 2025 includes impairment charges of €4,350 million and €165 million with respect to the Group's investments in Germany and Romania respectively, which are permanently non-deductible for tax purposes. 2. The amount for 2026 includes €38 million of tax in relation to the €256 million non-deductible liability to settle the CLAM (See Note 29 – Contingent Liabilities). The amount for 2025 includes €164 million of tax in relation to the 10.33% disposal of Vantage Towers, offset by a €109 million credit in relation to the non-taxable disposal of Indus Towers reduced by €56 million non-deductible settlement of MSA obligations that resulted in the release of the secondary pledge. The amount for 2024 includes €110 million of tax in relation to income of the continuing Group presented in Discontinued Operations, €37 million in relation to the disposal of M-Pesa Holding Company Limited and €30 million in relation to the Vantage Towers disposal. 3. The amount in 2024 includes €1,019 million of additional losses recognised in Luxembourg. 4. The amount in 2026 relates to the €358 million write-down of deferred tax assets in the Group UK tax group, reflecting an update to the Group’s assessment of the recoverability of those assets (see Deferred tax note below). 5. The amount for 2026 includes €305 million in relation to the phased corporate income tax rate reduction from 2027 to 2032 in Germany. The amount for 2025 includes €719 million in relation to a 1% corporate income tax rate reduction in Luxembourg. 6. The amounts for 2026, 2025 and 2024 relate to inflation adjustments in Türkiye.
6. Taxation (continued) Deferred tax is calculated at the tax rates that are expected to apply in the periods when the liability is settled or the asset realised, based on tax rates that have been enacted or substantively enacted by the reporting period date. The Group does not discount deferred tax balances. Tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they either relate to income taxes levied by the same taxation authority on either the same taxable entity or on different taxable entities which intend to settle the current tax assets and liabilities on a net basis. Tax is charged or credited to the income statement, except when it relates to items charged or credited to other comprehensive income or directly to equity, in which case the tax is recognised in other comprehensive income or in equity. Income tax expense 2026 2025 2024 €m €m €m United Kingdom corporation tax expense: Current year 39 59 70 Adjustments in respect of prior years 6 (8) 1 45 51 71 Overseas current tax expense/(credit): Current year 930 997 670 Adjustments in respect of prior years (4) (68) 25 926 929 695 Total current tax expense 971 980 766 Deferred tax on origination and reversal of temporary differences: United Kingdom deferred tax 280 (91) (36) Overseas deferred tax 554 1,357 (680) Total deferred tax expense/(credit) 834 1,266 (716) Total income tax expense 1,805 2,246 50 Tax charged/(credited) directly to other comprehensive income 2026 2025 2024 €m €m €m Current tax 19 (1) 2 Deferred tax 1 393 49 (579) Total tax charged/(credited) directly to other comprehensive income 412 48 (577) Tax charged directly to equity 2026 2025 2024 €m €m €m Current tax 5 4 – Deferred tax (17) 3 4 Total tax charged directly to equity (12) 7 4 Note: 1. The amount in 2026 primarily derives from gains on our investment in AST SpaceMobile, Inc and on cashflow hedges.
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