T-Mobile Austria GmbH and Others v Republik Österreich.

• Jurisdiction: European Union
• Celex Number: 62004CC0284
• ECLI: ECLI:EU:C:2006:520
• Date: 07 September 2006
• Docket Number: C-284/04
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 7 September 2006 ¹(1)

Case C-284/04

T-Mobile Austria GmbH and Others

v

Republic of Austria

(Reference for a preliminary ruling from the Landesgericht für Zivilrechtssachen Wien (Austria))

(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)

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. States, regional and local government authorities and other bodies governed by public law shall not be considered taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with these activities or transactions.

However, when they engage in such activities or transactions, they shall be considered taxable persons in respect of these activities or transactions where treatment as non-taxable persons would lead to significant distortions of competition.

In any case, these bodies shall be considered taxable persons in relation to the activities listed in Annex D, provided they are not carried out on such a small scale as to be negligible.

…’

9. In Annex D ‘Telecommunications’ are shown as item 1 on the list of activities referred to in the third subparagraph of Article 4(5) of the Sixth Directive.

2. National legislation

10. Under Paragraph 1(1), indent 1, of the UStG (Umsatzsteuergesetz, Law on turnover taxes) 1994, deliveries and other supplies which an operator makes for consideration within the country in the course of his business are subject to turnover tax. The charge to tax is not excluded because the transaction is effected on the basis of a legal or administrative act or is to be regarded under a legal provision as effected.

11. An operator within the meaning of Paragraph 2(1) of the UStG is a person who independently carries on a commercial or professional activity. Any activity pursued on a continuing basis for the purpose of obtaining income is a commercial or professional activity.

12. Under Paragraph 2(3) of the UStG, corporations governed by public law carry on commercial or professional activity only within their operations of a commercial nature (Paragraph 2 of the KStG (Körperschaftsteuergesetz, Law on corporation tax). Paragraph 2(1) of the KStG prescribes that an operation of a commercial nature of a corporation governed by public law is any installation which is economically independent and serves exclusively or predominantly for a private-economy activity of commercial significance pursued on a continuing basis for the purpose of obtaining income, or other economic advantages in the absence of participation in general economic activity, and not for agriculture or forestry.

13. Paragraph 2(5) of the KStG reads, in extract: ‘There is no private-economy activity within the meaning of subparagraph 1 if the activity serves predominantly for the exercise of public powers (public-authority operation) ...’.

14. The first and second sentences of Paragraph 11(1) of the UStG provide as follows: ‘If the operator effects transactions within the meaning of Paragraph 1(1), indent 1, of the UStG, he is entitled to issue invoices. If he effects the transactions to another operator for the latter’s undertaking or to a legal person where the latter is not an operator, he is obliged to issue invoices.’ (7) These invoices must under Paragraph 11(1), indent 6, of the UStG include the amount of tax on the payment.

B – Legal background to the award of UMTS frequencies

15. Radio frequencies are scarce resources. A large part of the radio spectrum technically available for use has already been allocated to specific services and types of use. To avoid interference, separate sections (frequency bands) are made available for each particular kind of use. The international categorisation of frequencies is based on work undertaken by the International Telecommunications Union (‘ITU’), an international organisation operating under the auspices of the United Nations.

16. The frequency bands opened up to the UMTS/IMT-2000 mobile system were determined in principle in 1992 by the World Radio Conference (‘WRC 92’) organised by the ITU. In Resolution 212 the World Administrative Radio Conference of 1997 assumes that IMT-2000 mobile communications systems will be introduced by about the year 2000.

17. The European Conference of Postal and Telecommunications Administrations (‘CEPT’) (8) carried out further preliminary work at European level on the introduction of third‑generation mobile communications. The European Radiocommunications Committee (‘ERC’), which forms part of that organisation, defined the frequency spectrum available in its Decision ERC/DEC(97)/07 of 30 June 1997. (9)

18. The part of the frequency spectrum reserved for third‑generation mobile communications can be subdivided into other sections in which several suppliers can operate mobile systems in parallel. The form and number of frequency use rights granted for this purpose varies from one Member State to another. (10) Whilst Austria and Germany divided the spectrum amongst six suppliers, for example, in Belgium and France there were only three. Hence, there is a certain amount of latitude – subject to minimum technical requirements – when determining the ranges licensed for the operation of a network.

19. The categorisation of frequencies for second-generation mobile communication services is also based on CEPT guidelines.

1. Community law

20. Directive 97/13/EC (11) formed the Community law framework for the grant of general authorisations and individual licences in the field of telecommunications services during the period that is relevant to this case.

21. Under Article 3(3) of Directive 97/13 ‘Member States may issue an individual licence only where the beneficiary is given access to scarce physical and other resources or is subject to particular obligations or enjoys particular rights, in accordance with the provisions of Section III.’

22. Section III of the Directive (Articles 7 to 11) deals with individual licences. Article 10 provides that the Member States may limit the number of individual licences to the extent required to ensure the efficient use of radio frequencies. They must, in particular...