Telecoms operators can be taxed twice on use of land for network infrastructure, rules CJEU

The Court of Justice of the EU (CJEU) said EU telecoms rules do not prevent individual EU countries from imposing both a property tax based on the occupation of public or private land by telecoms operators' network infrastructure in addition and a charge for the right to use that land to provide networks and electronic communication services.

EU telecoms laws, set out in the Authorisation Directive, permit EU countries to "impose 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".

The imposition of those fees must be "objectively justified, transparent, non-discriminatory and proportionate" and take account of overarching objectives of EU telecoms laws, including the advancement of competition, development of the internal market and promotion of citizens' interests.

However, two Belgian telecoms companies, Belgacom and Mobistar, had argued that authorities in Belgium could not levy a property tax since they were already subject to authorisation fees imposed for the use of the same land.

The CJEU ruled, though, that EU telecoms rules "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".

The Court said that the rules do not account for "all fees to which infrastructure permitting the provision of networks and electronic communication services are subject".

Instead, the rules only concern "authorisations for the provision of electronic communications networks and services" and therefore the fees applied in relation to those authorisations "concerns only 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".

Belgian authorities were therefore free to levy an additional tax based "on the area occupied by the establishments" operated by the telecoms operators, it ruled.

"The chargeable event giving rise to the tax at issue in the [Belgacom and Mobistar  cases] is not linked to the granting of rights of use for radio frequencies or rights to install facilities within the meaning of [EU telecoms laws]," the CJEU said. "Therefore, such a tax does not constitute a fee within the meaning of [EU telecoms laws] and, consequently, does not come within the scope of that directive."

Telecoms and property law expert Dev Desai of Pinsent Masons, the law firm behind Out-Law.com, said that most European businesses would have "considerable sympathy" for the Belgian telecoms operators affected by the CJEU's decision.

"There seems to be no real difference between, on the one hand, a 'property tax' based on occupation of land by telecommunications operators through their network infrastructure and, on the other, 'authorisation fees' for the right to use that land as part of their network infrastructure," Desai said.

"Telecoms operators face very significant cost pressure in maintaining and expanding their networks and this decision appears to put them at a greater competitive disadvantage against other land users. Therefore, it seems to run contrary to the European Commission's promotion of telecommunications in the EU and vision of a 'connected continent'," he added.

"Moreover, the decision sets an unwelcome precedent and operators across the EU will surely be watching what taxes and fees other EU member states introduce in the light of it," Desai said.