EU – VAT treatment of telecom/mobile services. – non EU telecom providers maybe facing new VAT obligations – Case C 593/19

On 22 October 2020, an opinion of the Advocate General (AG) has been published in the case SK Telecom Co. Ltd. Vs  Finanzamt Graz-Stadt (Case C‑593/19). This case concerns the use and/or enjoyment rules for VAT in case of roaming services in a EU Member State.

If the AG is followed by the court, this may have important consequences for non-EU telecom providers, as this may trigger VAT obligations in the Member States where such U&E provisions for telecom services are in place.

The date when the decision of the court is planned has not yet been published.

Summary of the facts :

  • SK Telecom is a Korean telecom company that provides mobile phone services to some of its customers, also based in South Korea, who were temporarily staying in Austria.
  • To enable these persons to use their mobile phones when they were in Austria, an Austrian network operator made its network available to SK Telecom in return for the payment of a user fee plus Austrian VAT (20%).
  • SK Telecom then invoiced the customers roaming charges for the use of the Austrian telecom network.
  • SK Telecom subsequently requested a VAT refund for the Austrian VAT invoiced by the Austrian network operator.
  • However this VAT refund was refused by the tax authorities. They were of the opinion that, based on the Austrian place of supply rules for this type of services, SK Telecom should have invoiced Austrian VAT, as the roaming charges were not subject to a tax in Korea similar to Austrian VAT.
  • In the course of the local court procedures the question was referred to the CJEU for a preliminary ruling,
    • whether a Member State may transfer to its territory the place of supply for roaming services, allowing the use of a mobile telephone network located in that Member State,
    • if those services are provided by a mobile telephone operator established in a third country to users having their permanent address or usually residing in that third country but temporarily staying in that Member State.


The AG considers that there are 2 supplies:

  • A B2B service by the Austrian network operator to the Korean operator SK Telecom, for the access to the telecom network in Austria, for payment of a fee;
  • a B2C service by the operator SK Telecom to the Korean telephone users who have subscribed to its services. That operator ‘sublets’, as it were, to users in the country of roaming (Austria) access to the network which it has previously obtained as part of the first service.

As the questions referred to the Court relate solely to the place of supply of the second service, the AG found it inappropriate to examine this first supply. However, interestingly reference is made to the opinion from the Commission that states that the first supply may have to be subject to the normal place of supply rules for B2B services and therefore implying that no Austrian VAT was due on this transaction. In such case, SK Telecom would not be required to request a VAT refund.

With respect to the second supply, the AG starts with indicating that some language versions of the VAT Directive talk about Effective Use OR Enjoyment, whereas others talk about Effective use AND Enjoyment. The AG considers the ‘OR’ version to be correct.

For the case at hand, the AG is of the opinion that the services are effectively used in Austria (and thus subject to Austrian VAT), as (1) the mobile telephone network used is located in Austria, (2) the users who are granted access to this network are temporarily staying in Austria and (3) such roaming services can only be used in Austria. In addition, the access by Korean customers to the Austrian network occurs in exactly the same way as the access by an Austrian customer.

Lastly, the AG confirms that the requirement of “avoiding non-taxation” to apply the Effective Use and/or Enjoyment in the case at hand is met, as the roaming services are not subject to VAT within the EU. The tax treatment in a third country is irrelevant for the purposes of the application of that provision.

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