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VAT court defeat for mobile firms

Some of the world's biggest mobile phone firms have lost out in a multi-million pound VAT claim in the EU's highest court.Hutchison, T-Mobile and Orange had argued they should be repaid £3 billion in tax after paying £22.5 billion for 3G mobile telephone licences in the UK seven years ago.But the European court of justice (ECJ) ruled that the sale of the licences did not constitute an economic activity."Economic activity includes all activities of producers, traders and persons supplying services, inter alia the exploitation of property for the purpose of obtaining income there from on a continuing basis," an ECJ statement said today.The court stated that the sale of the licences was designed at "ensuring the effective use of the frequency spectrum and the avoidance of harmful interference between radio-based telecommunications systems and other systems"."Thus, the court holds that such an activity constitutes a necessary precondition for the access of economic operators to the mobile telecommunications market," the court said in its ruling.In conclusion the ECJ ruled that ultimately the licences were concerned with the control and regulation of the use of the electromagnetic spectrum, and so does not fall within the EU's sixth VAT directive.

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