Luxembourg, 12/09/2000 (Agence Europe) - The Court of Justice has said that Member States must apply VAT, at the normal rate, on road tolls in force for infrastructures (motorways, tunnels, bridges, etc.) that are not managed by public bodies. Consequently, France, the United Kingdom and Ireland must introduce VAT, which they do not currently apply. Greece and the Netherlands, on the other hand, may maintain their current regimes as their toll infrastructures are operated directly by the public sector. Italy, Spain and Portugal already apply VAT (but Spain does so at a reduced rate which is being disputed in a case pending before the Court of Justice).
The case was lodged by the European Commission, which asked the Court to note that France, the United Kingdom, Greece and Ireland were not respecting Community law by not applying VAT to road tolls. It is to be stressed that the Community budget is directly concerned, as a share of VAT revenue represents own-resources for the Union.
The Court noted that some motorway operators were undertaking an economic activity in the sense of the Community regulation. Thus, VAT is applicable to them, except if the operators are bodies under public law, which is the case for Greece and the Netherlands.
In Brussels, the European Commission stresses that this Court ruling does not necessarily mean that tolls must increase to incorporate the 20% VAT. Indeed, motorway operators now have the possibility of deducting VAT from their purchases of supplies and installation maintenance, and in certain cases the advantage may exceed the burden of VAT; they could therefore refrain from recuperating VAT from users.