VAT: National Roads Authority (C-344/15) | KPMG | UK
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VAT: National Roads Authority (C-344/15) – Advocate General Opinion

VAT: National Roads Authority (C-344/15)

The AG concludes that VAT is due on road tolls collected by public bodies where they may be or are also collected by private operators.


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This reference from Ireland concerns the liability of road tolls collected by an Irish body governed by public law. The body was seeking a refund of VAT it had collected on roads it managed directly, arguing that it was not acting as a taxable person when it collected these tolls, therefore these tolls should be outside the scope of VAT. The Advocate General (AG) has however, disagreed pointing out that a charge for access to a road is an economic activity. In situations where public bodies do make a charge for a service, and act under a special legal regime when they do, but do not have a monopoly in the sector, Article 13 (which sets out when charges by public bodies can be viewed as outside the scope of VAT because they are not viewed as taxable persons when they make the charge) can be complicated to interpret.

This raises issues around whether the existence of the special regime means the supplies by the public body and private operators are sufficiently different so as not to be in competition or whether the special regime as such makes no difference to the fundamental similarity of the supplies. It is even possible that the answer here could be different depending on the nature of the applicable special regime and the supplies. As we have seen with the cases around off street parking the supply of parking is essentially the same whether the supplier is public or private, but for other supplies the market and customer requirements and customer experience may differ substantially between the types of provider.

This AG however, considers that for an activity where there is no monopoly, distortion of competition between the public body that is not charging VAT and the private operator that has to charge VAT on that activity should be presumed. That distortion will be significant unless it is negligible. If the public body has a monopoly of course there can be no competition and no distortion. However, there are private companies that also collect tolls in Ireland.

The AG has therefore said that where road tolls may be and actually are collected by bodies governed by public law and by private operators, the bodies governed by public law have to be treated as taxable persons. This is because it would be a distortion of competition not to treat them that way even if the roads in question (that is to say the one with a local authority toll and the one with a toll operated by a private company) are not themselves in direct competition. This is based very much on the Isle of Wight analysis of competition as activity based rather than geographical in nature. So according to the AG, both types of toll would be within the scope of VAT.

If the Court of Justice of the European Union (CJEU) agrees with the AG, this could impact the UK which taxes tolls payable to private sector operators but treats those operated by government bodies as outside the scope of VAT. This has been the case since February 2003 when the UK implemented the decision in another CJEU case, Commission v UK (C-359/97). The UK had previously treated tolls as VAT free.

To access the opinion click here.

For further information please contact :

Karen Killington

Steve Powell

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