ECJ Decision: Authorisation directive does not preclude public authorities to tax economic activity linked to telecommunication towers

12 September 2014

On 4 September 2014, the ECJ held that the Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services ("the Authorisation Directive") must be interpreted as not precluding operators providing electronic communications networks or services from being subject to a general tax on establishments, on account of the presence on public or private property of cellular telephone communication masts, pylons or antennae which are necessary for their activity (Cases C-256/13 and C-264/13).

BACKGROUND                       

Certain provinces and communes levy a tax on the presence of an "establishment" through which self-employed entrepreneurs or companies conduct their business, regardless of the nature of the establishment and the activity of those subject to the tax. The Province of Antwerp therefore considered that telecommunication towers and antennae qualify as such establishments and levied said taxation.
Two major telecom operators (Belgacom and Mobistar) successfully challenged this taxation, but the public authorities appealed against the decision. The telecom operators claim that the telecommunication towers should not be regarded as "establishments" for purposes of this tax regulation and, in addition, that such taxation would be an infringement of the Authorisation Directive.  The Antwerp Court of Appeal considered that Belgium's Constitutional Court had already ruled earlier that in 2011 (Case no. 189/2011 dd 15 December 2011) that provinces may tax, for budgetary or other reasons, the economic activity of telecom operators carried-out on the province's territory, on account of the presence on public or private property of cellular telephone communication masts, pylons or antennae which are used for their activity. The Court of Appeal therefore referred the case to the ECJ with a prejudicial question to confirm compliance with the Authorisation Directive.

ECJ DECISION

According to settled case-law, Member States may not levy any fees or charges in relation to the provision of networks and electronic communication services other than those provided for by that directive. Member States may impose a supplementary charge for the rights of use for radio frequencies or numbers or rights to install facilities with the purpose of ensuring optimal use of those resources. The term ‘facilities’ and the expression ‘install’ refer to the physical infrastructure enabling provision of electronic communications networks and services and to their physical installation on the public or private property concerned, respectively.

However, the Authorisation Directive does not concern all fees to which infrastructure permitting the provision of networks and electronic communication services are subject. It applies to authorisations for the provision of electronic communications networks and services and only concerns the fees for the rights of use for radio frequencies or numbers or rights to install facilities on, over or under public or private property which reflect the need to ensure the optimal use of these resources.

In the present case, the disputed tax applies to any legal entity incorporated under Belgian or foreign law which has an establishment in the Province of Antwerp, used by that legal entity or reserved for its use, regardless of the nature of the establishment and the activity of those subject to the tax. The amount of that tax depends on the area occupied by the establishments. Those subject to the tax are therefore not just operators providing electronic communications networks or services or those enjoying the rights provided for by the Authorisation Directive. Hence, the taxable event is not linked to the granting of rights of use for radio frequencies or rights to install facilities within the meaning of the Authorisation Directive. In other words, such a tax does not constitute a fee within the meaning of that directive and, consequently, does not come within its scope.

In light of those considerations, the ECJ held that the Authorisation Directive must be interpreted as not precluding operators providing electronic communications networks or services from being subject to a general tax on establishments, on account of the presence on public or private property of cellular telephone communication masts, pylons or antennae which are necessary for their activity.

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