The EU's top court has rejected two claims by some of Europe's largest mobile phone companies that they are owed billions of euro in tax refunds.
Vodafone, Telefónica, Deutsche Telekom, France Telecom and Hutchison Whampoa wanted to reclaim £3.3 billion they said they had paid in VAT when Britain sold five mobile phone licences for £22.5 billion in 2000.
A second case led by Germany's Deutsche Telekom in Austria was also dismissed. This effectively ended any chance of success for a similar claim pending in Germany, where six operators spent €50.5 billion on third-generation licences in 2000.
Companies argued they should be able to reclaim tax on 3G licence costs, which totalled more than €100 billion across Europe around seven years ago, because subscribers, rather than the companies, were the final consumers.
But after a three-year legal battle, the European Court of Justice (ECJ) ruled that only economic activity was subject to VAT taxation. It said the auction of licences did not constitute an 'economic activity'. The sale was not a simple commercial transaction as governments also regulate airwaves.
Although European mobile phone operators had thought it unlikely that any European government would hand cash back, they felt they had a duty to fight the case.
Britain welcomed the decision, saying the agreed price for the licences was not subject to VAT.
Having already dug deep to buy the 3G licences, mobile operators then had to spend billions more building new mobile networks. But proceeds from the long hoped-for mobile data revolution were far less than originally hoped.
