203 Vodafone Group Plc Annual Report 2026
Strategic report
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Tax cases Netherlands tax case
29. Contingent liabilities and legal proceedings (continued) Vodafone Idea
Vodafone Europe BV (‘VEBV’) received assessments totalling €267 million in tax and interest from the Dutch tax authorities, who challenged the application of the arm’s length principle in relation to various intra-group financing transactions. VEBV appealed against these assessments to the District Court of the Hague where a hearing was held in March 2023. The District Court issued its judgement in July 2023, upholding VEBV’s appeal in relation to the majority of issues and requiring the Dutch tax authorities to significantly reduce its assessments. VEBV and the Dutch tax authorities subsequently appealed the District Court’s judgement before the Court of Appeal of The Hague. A final decision from the Court of Appeal is expected in late 2026. The Group continues to believe it has robust defences but has recorded a provision of €27 million for tax and accrued interest reflecting the July 2023 judgement and the Group’s current view of the probable financial outflow required to fully resolve the issue. VISPL tax claims Vodafone India Services Private Limited (‘VISPL’) has now closed all outstanding tax disputes with the Indian tax authorities relating to Vodafone’s acquisition of Hutchison Essar (later renamed Vodafone India Limited), including the five assessment years between 2008-09 and 2014-15. The tax amnesty was formally concluded in July 2025. The amnesty gave rise to an income statement tax charge of €185 million in the financial year ended 31 March 2025. No income statement tax charge arose in the financial year ended 31 March 2026. Other cases in the Group Germany: price increase class action In November 2023, the Verbraucherzentrale Bundesverband (Federation of German Consumer Organisations) initiated a class action against Vodafone Germany in the Hamm Higher Regional Court. Vodafone Germany implemented price increases of €5 per month for fixed lines services in 2023 in response to higher costs. The claim alleges that terms regarding price increases in the consumer contracts entered into by Vodafone Germany’s customers up until August 2023 are invalid under German civil law and seeks reimbursement of the additional charges plus interest. Customers must enter their details onto the register of collective actions on the Federal Office of Justice website in order to participate in the claim. The register opened in April 2024 and as at 31 March 2026, approximately 115,100 customers had registered. Vodafone Germany filed its defence in August 2024. Proceedings in the class action have been suspended pending the outcome of a referral to the Court of Justice of the European Union in a related case. Whilst the Group intends to defend the claim, it is not able to determine the likelihood or estimate the amount of any possible financial loss at this stage of the proceedings. Germany: claims regarding transfer of data to credit agencies Individual consumers are bringing claims against Vodafone Germany and/or the other national network operators for GDPR infringement relating to the transfer of data to credit agencies without consent. Vodafone Germany’s position is that the transfer of information about the existence of a consumer contract is justified for fraud prevention purposes. The Group will continue to defend these claims. However, the Group now considers the risk of a material financial impact to be remote.
As part of the agreement to merge Vodafone India and Idea Cellular in 2017, the parties agreed a mechanism for payments (the ‘CLAM indemnity’) between the Group and Vodafone Idea Limited (‘VIL’) under which the Group would reimburse VIL in the event of the crystallisation and payment of certain identified contingent liabilities. The Group’s maximum potential exposure under this mechanism was capped at INR 64 billion (€585 million). On 31 December 2025 the Group reached an agreement with VIL to settle the Group’s obligations under the CLAM via the following transactions: - The Group will make cash payments totalling €219 million to VIL; there will be no net cash outflow for the Group as these will be funded by VIL’s payment of €219 million of outstanding service charges; and - The Group has set aside 3,280 million of Vodafone Group's shares in VIL for VIL’s benefit. VIL will have the right to instruct Vodafone to sell these shares, in one or more tranches over up to five years, with any cash proceeds being transferred to VIL. The Group has recognised a liability of €256 million, based on the observable market value of the shares that have been assigned to VIL. Legal proceedings The Group is currently involved in a number of legal proceedings, including inquiries from, or discussions with, government authorities that are incidental to its operations. Legal proceedings where the Group considers that the likelihood of material future outflows of cash or other resources is more than remote are disclosed below. Where the Group assesses that it is probable that the outcome of legal proceedings will result in a financial outflow, and a reliable estimate can be made of the amount of that obligation, a provision is recognised for these amounts. In all cases, determining the probability of successfully defending a claim against the Group involves the application of judgement as the outcome is inherently uncertain. The determination of the value of any future outflows of cash or other resources, and the timing of such outflows, involves the use of estimates. The costs incurred in complex legal proceedings, regardless of outcome, can be significant. The Group is not involved in any material proceedings in which any of the Group’s Directors, members of senior management or affiliates are either a party adverse to the Group or have a material interest adverse to the Group.
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