Danny McCance 5 Aug 2019 12:00pm

Just Eat sets aside provision for Danish tax battle

The food delivery platform has put aside a provision against a £126m bill from Danish tax authorities as it awaits the conclusion of the ongoing dispute

In it’s half-year results, Just Eat announced a £20.8m provision for its tax liabilities globally, some of which will be “held in relation to the Danish matter”.

The figure, according to the company, is “calculated based on probability weighting of a range of possible outcomes, the most extreme of which is a full claim of £126m”.

Just Eat said the key factors in its estimate included “whether the basis for the claim made by the Danish authorities is valid; the valuation of relevant assets; and the length of time over which royalty relief may be applied, ranging from five years to 25 years”.

The company said that there is a chance that a change in its estimation “could result in a material adjustment within the next 12 months”.

In January last year, Danish tax authorities made a claim against Just Eat following the results of a transfer pricing audit that suggested the company should pay an additional £126m in taxes for the 2013 financial year.

In 2012, Just Eat had updated its transfer pricing arrangements “to reflect the economic reality” that its headquarters were established in the UK.

Just Eat had submitted an advanced pricing agreement at the time, and the Danish authorities later opened an investigation into the periods covered by this agreement, finding that Just Eat’s taxable income for 2013 needed to be increased.

Just Eat said that it strongly disagreed with the claim made by the Danish tax authorities, appealing the decision through a mutual agreement procedure (MAP) with the UK and Danish competent authorities.

“We expect this issue to be resolved through the MAP, with the outcome being full elimination of the potential double taxation,” the company stated it its half-year results.

Earlier today, the boards of Just Eat and announced that an agreement had been reached on a “recommended all-share combination,” the completion of which “would create one of the largest food deliver companies in the world”.

In a regulatory statement Just Eat said the scheme, which would create the new group under the proposed name of Just Eat NV, is expected to become effective in the final quarter of the year.

Just Eat has been contacted for further comment.