One Week to European 3G License Tax Decision

Next Tuesday (26th June) will be an important day for several European network operators, as the European Court of Justice is due to deliver its final verdict on a court case as to whether 3G licenses were subject to taxation. If they are, then the companies will be able to reclaim that tax against their governments, potentially earning them billions in the process.

The five UK operators, which include Hutchison Whampoa and Vodafone, have demanded a £3.3 (US$6.5) billion tax rebate. The eight Austrian companies, which include Deutsche Telekom's T-Mobile and Mobilcom Austria, asked to be paid back €140 (US$188) million.

The companies have argued that the sale of the 3G licenses was a regular business transaction - and such transactions almost always include a VAT in the final bill, which is returned for business expenses. In addition, European Union VAT legislation lists telecoms as one area where governments can be treated like commercial companies. Last September, the Advocate General of the European Court of Justice, Juliane Kokott however decided that the companies are not entitled to claim back taxes on their 3G licenses, and while the court usually follows the recommendations of the Advocate General, it is not unheard for them to reject them."

Posted to the site on 19th June 2007