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Mobile Phone Firms Compromise With Germany Over VAT Refunds

by Ulrika Lomas, Tax-News.com, Brussels

24 December 2004


Several major mobile phone companies may not now need to sue Germany for billions of euros in VAT refunds connected to the purchase of third generation licences, according to a report in the German daily, Handelsblatt.

According to the report, which quoted an unnamed company source, the firms, which include Vodafone, T-Mobile and O2, have been engaged in “constructive talks” with the German authorities, which could lead to a compromise settlement.

"If the verbal assurances we were given are fixed in writing then we will not sue," the source revealed.

Mobile phone firms claim that the sums they paid to governments to acquire 3G licences included VAT, and therefore they are entitled to a tax refund.

Under the compromise deal proposed by the German authorities, the validity of the VAT claims would be extended until the European Court of Justice decides whether the claims are legitimate.

The German government received some EUR50 billion through the sale of 3G licences in 2000.

A ruling is expected within 18 months.


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