The ball is once again in the court of the Maltese judiciary who has to decide whether the excise duty which is imposed on mobile telephony services by the Maltese authorities is permissible in terms of EU law. However, such a decision must now be taken on the basis of the guidance recently provided by the Court of Justice of the European Union in a preliminary ruling that it has given.
The CJEU does not decide the dispute itself but leaves it for the national court or tribunal to decide the case in accordance with the guidance given by the CJEU on the matter
In the course of proceedings held before them, the courts and tribunals of each EU member state may make a preliminary reference to the CJEU, requesting guidance as to the interpretation of EU law or the validity of an EU Act.
In such cases, the CJEU does not decide the dispute itself but leaves it for the national court or tribunal to decide the case in accordance with the guidance given by the CJEU on the matter.
This is precisely what the Maltese Constitutional Court did in a case which came before it. It made a preliminary reference seeking guidance from the CJEU as to whether the EU Authorisation Directive prohibits or otherwise the imposition of excise duty on mobile telephony services. Operators in the telecommunications sector, namely Vodafone Malta Ltd and Mobisle Communications Ltd, claimed before the Maltese courts that the Maltese law imposing excise duty on mobile telephony services is incompatible with the afore-mentioned directive and to this end should be annulled. Member states cannot impose charges or levies other than those specified in this directive, the operators alleged.
The contestants maintained that the excise duty on mobile telephony services is not a charge of general application as permitted by the directive but a specific charge which applies only to mobile telephony operators.
Such an “excise” duty, levied at the rate of three per cent, is calculated as a percentage of the payments which operators receive from the users of mobile services and operators subsequently pass it on to the tax authorities.
The Authorisation Directive makes provision not only for rules governing the procedures for granting general authorisations to electronic communications service providers or rights to use radiofrequencies or numbers but also for rules relating to the nature and scope of the charges related to such procedures which member states may impose on operators in the sector.
It permits member states to impose on such operators only administrative charges as remuneration for the total administrative costs incurred in the management, control and enforcement of the general authorisation scheme and of rights of use and imposition of specific obligations.
The CJEU explained that a charge, the trigger for which is linked to a general authorisation procedure for access to the electronic telecommunications services market, falls within the scope of the Authorisation Directive. Member states must then ensure that such an administrative charge is levied only for the purposes described in the Directive and complies with the requirements set out therein. On the other hand, the court went on to point out that the charge does not fall within the scope of the Authorisation Directive if the trigger for it is linked not to a general authorisation procedure for access to the relevant market but to the use of mobile telephony services provided by operators and which is ultimately borne by the user of such services.
Considering the case before it, the CJEU noted that the charge imposed by Maltese law and referred to as “excise duty”, is not levied on all electronic telecommunications operators holding a general authorisation but only on operators providing mobile telephony services.
Furthermore, it observed that such a charge is calculated as a percentage of the fees paid to the latter operators by the users of mobile telephony services on an individual basis, with the charge in question subsequently being passed on to the Comptroller of Customs. In the light of such considerations, the CJEU concluded that the charge at issue imposed by Maltese law is similar to a tax on consumption.
However, this is ultimately a matter for the national court to verify, the CJEU asserted. If that is the case, the CJEU continued, the charge falls outside the scope of the Authorisation Directive and is not precluded by the said Directive since in such a case the trigger for the duty is not linked to the general authorisation procedure for access to the electronic communications services market but is linked to other considerations.
The national courts will now therefore have the ultimate say in the matter.
Taking into consideration the facts at hand, they need to decide whether the charge under examination can indeed be considered as a tax on consumption, hence falling outside the purview of the Authorisation Directive, or otherwise.
mariosa@vellacardona.com
Mariosa Vella Cardona is a freelance legal consultant specialising in European law, competition law, consumer law and intellectual property law.