Mobile Phone Providers Attempt To Reclaim VAT For 3G Licences

by Ulrika Lomas, Tax-News.com, Brussels

05 August 2004

The European Court of Justice is currently hearing a case brought by eight Austrian mobile phone providers seeking to reclaim tax from their domestic government, which could result in national governments paying out billions of euros in VAT refunds.

The companies in question are attempting to claim from the Austrian government some €140 million of value-added tax (VAT) that they say should have been included in the €832 million they paid for ‘third generation’ network licences in November 2000.

The Austrian government is contesting the claim, arguing that the licences are exempt from Value Added Tax.

The lawsuit has been filed by the six 3G licencees including the Austrian units of Deutsche Telekom, Mobilkom, Hutchison Whampoa, Telefonica Moviles, Connect Austria and tele.ring. Two firms with standard GSM licences have also filed suits.

Mobile phone companies have spent approximately €100 billion euros acquiring the right to provide third generation services.

International law experts believe a ruling in favour of the mobile firms will likely leave other member states open to claims for VAT refunds.

"If the European Court decides that these licences were subject to taxation, then it is hard to see how other European countries that held similar licence auctions could say they were not taxable," a spokesman for international law firm Baker & McKenzie told the BBC.

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