Austria 3G tax case sent to European court

August 3, 2004

The Austrian mobile providers fighting to win back tax refunds for 3G mobile phone licenses have had their case sent to the European Court. A favourable ruling for the mobile companies could see 3G license winners in other EU countries seeking a similar outcome.

The companies are trying to get the Austrian government to return 140 million euros of value-added tax (VAT) that should have been included in the 832 million euros they paid for 3G network licences in November 2000.

The government has always insisted that telecom licences are exempt from value-added tax.

The lawsuit was filed by the six 3G licencees, the Austrian units of Deutsche Telekom, Mobilkom, Hutchison Whampoa, Telefonica Moviles, Connect Austria and tele.ring. Two companies with standard GSM licences also joined the case.

If the European Court rule that the licence fee had included VAT payments it would likely lead to further claims against governments across the EU. Mobile operators in countries such as the UK have filed cases against the government, demanding them to return the VAT from the license fees.

In the UK, the government had refused to issue a VAT invoice for the licenses. They said it acted as a public body and therefore VAT is not levied and cannot be reclaimed.