Luxembourg, 08/09/2006 (Agence Europe) - In the T-Mobile Austria case (C-28), Court of Justice Advocate General Kokott says that the state auctioning of third-generation (3G) mobile phone licences is not liable to valued added tax (VAT). Her conclusion goes against the views argued by telecoms companies in Austria and the UK that the granting of 3G licences should be subject to VAT (and which the companies would then be able to reclaim from the state).
T-Mobile Austria GmbH and other companies took Austria to court, and Hutchison 3G UK Ltd, mmO2 plc, Orange 3G Ltd, T-Mobile (UK) Ltd and Vodafone Group Services took the Commissioners of Customs and Excise in the UK to court in Austria and the UK respectively. The courts asked the European Court of Justice whether the sixth EU VAT Directive required state auctioning of 3G licences to be subject to VAT. Advocate General Kokott's answer was no.
In 2000, the Radiocommunications Agency (United Kingdom) and the Austrian Telekom-Control-Kommission each issued a number of licences for the use of certain frequency blocks for the provision of mobile telephone services in accordance with the UMTS/IMT-2000 standard (also known as third generation - 3G - mobile telephone services). Through such auctioning the United Kingdom made gains in the order of £22.5 billion (EUR 38 billion), and Austria EUR 800 million. In Austria, frequencies had already been allocated in the same manner for the provision of second generation mobile telephone services (GSM-Standard) and for the TETRA trunked radio system.
In a press release, Advocate General Juliane Kokott rejects the argument that VAT should be charged, because 'in issuing licences, the State and its institutions were carrying out an activity required of them as public authorities. Only the State regulatory authorities are authorised under Community legislation to issue individual licences for operating a telecommunications network. The decisive factor is that they were operating under a special legal regime applicable only to the State. The form of the transaction was irrelevant'. She recognises that 'State institutions may count as taxable persons, even in respect of activities which they are obliged to perform as part of their public duty, if treatment as non-taxable persons would lead to significant distortions of competition,' but 'no such risk exists, in principle, where at the time of the transactions by the State, private-sector suppliers are precluded by the overall legal regime from bringing supplies onto the market that are in competition with State supplies'.