Austria VAT on Roaming: Court Confirms Tax Rules

The Austrian Supreme Administrative Court published a decision on whether Austria can impose VAT on mobile roaming services physically used within its territory, even when those services are contractually supplied by a non-EU telecom operator and potentially governed by International Telecommunication Regulations (ITR). More specifically, the case focuses on two fundamental issues regarding how far Austria’s VAT rules can reach in cross-border telecom scenarios.

Background of the Case and Court's Ruling

A UAE mobile operator provided telecom services to its customers at home. However, when those customers traveled to Austria, they effectively consumed services through Austrian networks under roaming arrangements. The Austrian telecom operators charged the UAE operator for network access and applied Austrian VAT to those charges, and the UAE operator then passed on roaming costs to its customers. Importantly, the UAE operator later tried to recover the Austrian VAT following a refund procedure available to non-resident businesses.

The Austrian Tax Authority not only denied the refund request but also went a step further and determined that the UAE operator itself owed Austrian VAT on the roaming services it supplied to its customers while they were physically in Austria. This conclusion was based on Austria’s “use and enjoyment” rule, implemented through the Telecommunications Order. A rule that allows Austria to shift the place of taxation to Austria if services are actually consumed there.

Therefore, at the center of the dispute is whether Austria can treat roaming services as taking place within its territory when they are actually consumed there, even if supplied by a non-EU operator to non-EU customers, and whether the so-called Melbourne Agreement under the International Telecommunication Regulations prevents Austria from taxing these services.

The Supreme Administrative Court ruled in favour of Austria, stating that Austria is entitled to apply VAT based on where the service is effectively used, regardless of the operator’s location or international telecom agreements. Additionally, the Administrative Court underlined that such a decision aligns with the Court of Justice of the European Union (ECJ) decision in the SK Telecom C‑593/19 case.

Conclusion

Apart from making it clear that Austria can impose VAT on roaming services whenever those services are actually used on Austrian networks, regardless of where the mobile operator or its customers are based, the ruling also establishes that international telecom frameworks, such as the International Telecommunication Regulations, deal with operational and commercial arrangements between telecom operators rather than tax obligations. 

Following the outcome of the dispute, non-EU mobile operators offering roaming in Austria need to assess whether they have VAT registration and reporting obligations there, as well as whether they are entitled to recover Austrian VAT charged by local network operators.

Source: Administrative Court (VwGH)