Mobile phone giants suffer £3.3bn VAT loss


Mobile Phone giants, including Vodafone and Orange, have failed in their
attempts to claim back £3.3bn in VAT for money paid to UK regulators for 3G

The challenge by the mobile phones groups had gone all the way to the
European Court of Justice, which today ruled that the groups should not be able
to claim back the VAT as money paid for licenses did not constitute economic

‘The Court points out that only economic activity is subject to VAT. The
Court holds that the allocation, by auction by the national regulatory authority
responsible for spectrum assignment… does not constitute an “economic activity”
,’ the ECJ said.

The UK government raised £22bn from the auction of 3G licenses, which enabled
the successful bidders to offer video and internet through mobile phones. Other
EU countries have followed the case closely as there are similar issues in these

The mobile phone groups, including Vodafone, Orange, T-Mobile and 02, had
argued that because customers were the ultimate beneficiaries of the licenses
they should be allowed to recover VAT.

It was highly unlikely that the mobile phone groups would win the case, after
the advocate general gave an opinion against their case in September last year.

Further reading:

Read the judgment

3G protests fall on deaf ears at ECJ

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