Opinions nº C-284/04 of Court of Justice of the European Communities, September 07, 2006
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Summary
Sixth VAT Directive - Definition of economic activity - Bodies governed by public law as taxable persons - Auction of licences to use frequencies for third-generation telecommunications services [UMTS] and for GSM-DCS-1800 and TETRA
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Extract
Opinions nº C-284/04 of Court of Justice of the European Communities, September 07, 2006
I - Introduction
1. In November 2000 the Telekom-Control-Kommission, the Austrian regulatory authority, conducted an auction of several frequency blocks to provide mobile communications under the UMTS/IMT-2000 ( 2 ) standard (also called third generation mobile communications - 3 G) and then awarded corresponding frequency use rights to the successful bidders by a decision. Revenue totalling EUR 831 595 241.10 was received as a result. Frequencies for the supply of second-generation mobile communications (GSM Standard ( 3 )) and for the TETRA trunked radio system ( 4 ) had already been awarded in a similar way. 2. 3G mobile devices have greater capacity to transfer data than mobile phones of previous generations. They enable the provision, in particular, of multimedia services such as video-conferencing, internet access and on-line entertainment. The introduction of UMTS mobile communications is considered an important technical advance opening up many new fields of activity to telecommunications organisations. 3. In the main proceedings the eight telecommunications organisations that acquired the frequency use rights (hereinafter: -the Claimants-) are claiming that the award of the rights was a transaction subject to value added tax and that the frequency use payments included VAT. They are therefore asking for invoices showing VAT to be issued. This is necessary in order to deduct the allegedly paid VAT as input tax. 4. According to Article 4(1) and (2) of the Sixth VAT Directive (hereinafter: -the Sixth Directive-) ( 5 ) only transactions that a taxable person carries out in the course of his economic activity are subject to tax. According to Article 4(5) of the Directive the State and its bodies are not, in principle, to be considered taxable persons where they exercise public authority. It is the interpretation of these provisions in the context of the auctioning of the frequency use rights that forms the cornerstone of these proceedings. 5. In a reference for a preliminary ruling made in parallel with this case and on which I am also delivering my Opinion today, ( 6 ) the VAT and Duties Tribunal London has asked similar questions on how to assess the auctioning of UMTS licences in the United Kingdom. 6. Other Member States also followed the British and Austrian example and received high licence fees as well. The present proceedings and the parallel proceedings in the United Kingdom are therefore of particular significance not only because of the enormous sums at stake but also because they will serve as an example for similar cases in other Member States. II - Legal framework A - VAT legislation 1. Community law 7. Under Article 2(1) of the Sixth Directive the following are subject to value added tax: -the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such; --. 8. Article 4 of the Sixth Directive defines who is to be considered a -taxable person- as follows: -1. -Taxable person- shall mean any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity. 2. The economic activities referred to in paragraph 1 shall comprise all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions. The exploitation of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis shall also be considered an economic activity. ... 5. ...See the full content of this document
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