European Court of Justice to rule on 3G tax rebate

6 Oct 2004

The European Court of Justice will make the final decision on whether UK 3G licensees can claim a tax rebate on the cost of their concessions. The move is likely to be seen as a precendent making case for all other European operators seeking to recoup some of the cost of their licences. If the operators win, European governments could be forced to repay a percentage of the EUR100 billion they secured. In the UK the five wireless operators have argued persuasively that the GBP22.5 billion they spent on 3G licences in 2000 included VAT at 17.5%. The VAT tribunal highlighted six main points that need to be clarified by the European Court of Justice; key to the case is the strict definition of ‘telecommunications’, specifically whether the auction of 3G licences in the UK should be deemed telecommunications activity. The telco have argued that it should.