• Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 12/12/2013

Malta – Mobile telephony services changes found not in violation of Authorization Directive 

GITB Malta

Charges on the consumption of mobile telephony services

On 27 June 2013, the Court of Justice of the European Union (CJEU) decreed in case C 71/12 (Vodafone Malta ltd and Mobisle Communications ltd vs. Attorney General et al.) that charges, in the nature of the contentious 3 percent excise duty levied in Malta on mobile telephony usage are not in violation of the Authorization Directive.


Act No. II of 2005 amending the Maltese Excise Duty Act introduced an excise duty at a rate of 3 percent on a number of charges levied by mobile operators for their services including subscriptions and top-up vouchers. The duty is calculated as a percentage of the charges paid by mobile telephony users to the operators and paid by the mobile telephony operators to the respective authorities. The two largest operators in Malta, Vodafone Malta and Mobisle Communications brought proceedings in the Maltese Civil Court to annul the relevant provisions of law, stating them to be in breach the Authorization Directive. This Directive aims to establish a harmonized market for electronic communication networks and simplified authorization rules and conditions.

The Maltese Courts dismissed this action stating that as the trigger of such charges was linked to the use of the service rather than its authorization, the charges were not precluded by the Directive. Vodafone Malta and Mobisle Communications appealed before the Maltese Constitutional Courts. With doubts on the scope of the Authorization Directive, the Constitutional Court referred the issue to the CJEU for a preliminary ruling on of the compatibility point.

The CJEU’s view

The Court found that given the charges are not levied on all operators with an authorization but are linked directly with service usage and are ultimately borne by the user, they are akin to a charge on consumption. As such they are not in conflict with the provisions of the Authorization Directive. This judgment is in line with a number of other CJEU decisions in this area, including case C-485/11 (Commission vs. France) that was handed down on the same day. In this case it was concluded that a special charge levied in France based on the operator’s activities and turnover was not at odds with the Authorization Directive. With the benefit of the CJEU’s guidance the Maltese Courts must now verify that the characteristics of the 3 percent excise duty are similar to a tax on consumption in order to conclude on its compatibility with the Authorization Directive.

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Global Indirect Tax Brief - December 2013

GITB - December 2013
Global indirect tax brief brings together articles on international VAT developments, written by KPMG member firms'.