Spectrum allocations are not economic activities subject to value...

regulators. Several providers then won licenses in an auction, paying 22.5 billion pounds (38 billion euros) in the U.K., and 831.6 million euros in Austria. In actions in their respective national courts, the companies argued that the allocations of rights by the states were transactions subject to VAT and that their payments had included the tax, which they were entitled to deduct. The ECJ said only economic activity is subject to VAT. Allocating spectrum rights to economic operators is a necessary precondition for access of those companies to the mobile telecommunications markets and does not amount to participation in the market by regulators, it said. Only providers holding frequency rights granted can exploit them, the court said, and the fact that issuing the rights gives rise to a payment does not affect an activity’s legal status. Spectrum auctions by national regulators do not amount to economic activity within the meaning of the Sixth VAT Directive, the ECJ said.