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Thursday, 28 June 2007 |
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An attempt by major 3G operators to claw back some of their overspend in the madness of spectrum auctions has failed in the courts.
The European Court of Justice has kicked into touch an attempt by mobile operators in Austria and the UK to claim a refund of more than €4.5bn in lieu of VAT charges related to 3G licence auctions dating back to 2000. Total licence payments in the two countries were just under €40bn, with the vast majority (some €38bn) incurred in the UK.
The nub of the rather desperate argument made on behalf of the mobile operators in their case against the UK’s Radiocommunications Agency and Austria’s Telekom-Control-Kommission was that these government agencies were engaged in a form of “economic activity” by licensing the spectrum. This would incur value-added tax, which the operators hoped to offset against the VAT they incurred in the running of their 3G businesses.
The judges have now ruled that the licences represent a “precondition” and “authorisation” for economic activity, rather than economic activity in its own right: ”the Court holds that the allocation, by auction by the national regulatory authority responsible for spectrum assignment, of rights to use frequencies in the electromagnetic spectrum does not constitute an ‘economic activity’ within the meaning of the Sixth VAT Directive. Thus, that activity does not fall within the scope of the Sixth VAT Directive.”
With the Court being based in tiny Luxembourg, there is every chance that, in being ‘kicked in to touch’, the case will by now have landed in somebody’s backyard in a neighbouring country… never to be seen again.
Jim Chalmers
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