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Commission tells France, Spain telecoms taxes are unlawful

Posted by malcolm on Friday, October 1st, 2010 at 12:00

The European Commission has told France and Spain to repeal their sector-specific taxes on telecoms operators, which it says are prohibited under European law.

When France and Spain abolished paid advertising on their public service TV channels in 2009 they each introduced a tax of 0.9% of gross revenues on telecommunications operators to make up for the loss to government funds. This is expected to cost operators around €400 million in France and € 230 million in Spain. The Commission has decided this doesn’t amount to a prohibited State Aid for public service TV, but does constitute an unfair and unlawful imposition on the telecoms companies.

The Authorisation Directive, 2002/20/EC, part of the Telecommunications Regulatory Framework, provides a General Authorisations for anybody may operate a telecommunications service in Europe, subject to certain conditions, without needing a licence. Member States are allowed to impose a sector-specific charge on telecoms operators to “administrative costs” of operating and enforcing the regulatory regime (essentially, to fund the national regulatory authority), but these charges must be “objective, transparent, and proportionate”.

Article 12

  1. Any administrative charges imposed on undertakings providing a service or a network under the general authorisation or to whom a right of use has been granted shall:
    1. in total, cover only the administrative costs which will be incurred in the management, control and enforcement of the general authorisation scheme and of rights of use and of specific obligations as referred to in Article 6(2), which may include costs for international cooperation, harmonisation and standardisation, market analysis, monitoring compliance and other market control, as well as regulatory work involving preparation and enforcement of secondary legislation and administrative decisions, such as decisions on access and interconnection; and
    2. be imposed upon the individual undertakings in an objective, transparent and proportionate manner which minimises additional administrative costs and attendant charges.

  3. Where national regulatory authorities impose administrative charges, they shall publish a yearly overview of their administrative costs and of the total sum of the charges collected. In the light of the difference between the total sum of the charges and the administrative costs, appropriate adjustments shall be made.

[emphasis added]

— extract from the Authorisation Directive, 2002/20/EC

The Commission’s action has wider potential significance than just France and Spain: it suggests that all sector-specific charges on telecoms operators designed to support subsidise other industries may be prohibited. This will be seen as good news for ISPs, and a blow to those in the copyright industries who have called for taxes on ISPs to prop up their traditional business models.

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