Networks fail in £3.3bn 3G tax refund bid

The five UK mobile phone networks have failed in their attempt to reclaim VAT on the £22.5bn they paid the Treasury in 2000 for 3G licences.

The European court of justice rejected the case put by the companies – 3, O2, Orange, T-Mobile, and Vodafone – arguing that they should be able to reclaim VAT on the deal. The Court ruled that the issuing of licenses by national governments was not an “economic activity” and so does not fall within the scope of VAT rules.

The court judgment comes as little surprise as it follows a preliminary legal opinion along the same lines from one of the court’s legal advisors last autumn.

But at least one of the operators – Orange – is considering a further legal challenge after the ECJ answered just one of the six questions it was asked to consider in reaching its judgment.
The Court’s decision was widely expected; it follows a preliminary legal opinion along the same lines given by one of the court’s legal advisors last year.