Court rules operators not liable for local govt taxes on infrastructure they don’t own.
The Spanish divisions of Vodafone Group PLC and France Telecom Thursday won a case at the European Union’s top court, which ruled that telecom companies needn’t pay local government taxes for the construction of communications infrastructure if they don’t own them.
The ruling means mobile companies operating in Spain won’t face a bill that industry officials estimate could have been about 200 million euros ($244 million) this year.
The court said that a tax can’t be placed on a company that only operates the equipment but can be imposed on the infrastructure’s owner.
“EU law prohibits member states from imposing that fee on operators who, without owning that infrastructure, use it to provide mobile telephony services,” the European Court of Justice said in a statement.
The companies originally filed the complaint in Spain against the municipalities of Tudela, Santa Amalia, and Torremayor. At issue were taxes those governments levied against the companies for the installation of telecom equipment on public property.
Javier Gutierrez, a spokesman for Vodafone, estimated that this year alone, the bill for Spanish telecoms companies would have been around EUR200 million, with 1,651 Spanish municipalities having passed laws to impose the tax. In total, he said, the industry could have faced a tax bill for EUR700 million including unpaid back taxes from previous years.
He said that Vodafone had filed 2,000 lawsuits in Spain against the taxes and against municipalities that sought to claim the tax before the legal case was settled. He estimated that the mobile industry had filed some 8,000 lawsuits on the issue in Spain.
A spokesman for France Telecom declined to comment on the ruling. The companies claimed that because they were merely operators of the equipment and not proprietors, the fees were illegal under a 2002 EU directive.
The Spanish supreme court referred the case to the ECJ, which sided with the telecom companies. In its decision, the court acknowledged that the 2002 law doesn’t define all of the relevant infrastructure issues, but ruled that governments “may not levy any fees or charges… other than those provided for by that directive.”