CJEU on roaming services’ place of supply
In the case of SK Telecom Co. Ltd, No. C-593/19, the Court of Justice of the EU (CJEU) dealt with the determination of the place of supply for roaming services, following the rule of effective use and enjoyment.
SK Telecom, a South Korean company, provided roaming services to their customers established in South Korea during their stays abroad, including Austria. For this purpose, the Austrian network operator provided SK Telecom with its network, at prices charged including Austrian VAT. SK Telecom subsequently requested a refund of the VAT paid, under the relevant EU directive.
The Austrian tax authority denied this request, arguing that the roaming fees charged by SK Telecom to their customers in South Korea were taxable in Austria. The tax authority mainly invoked the provision of the Austrian VAT Act under which the places of supply shall be relocated to Austria, as the SK Telecom’s customers effectively used and enjoyed the services in Austria; SK Telecom therefore did not fulfil the conditions for VAT refund under Austrian law.
The CJEU dealt with the question whether the said provision in Austrian law was consistent with Article 59a of the VAT Directive. Article 59a allows member states to consider a place of supply of services situated outside the EU as being situated within their territory if the services are effectively used and enjoyed in their territory. According to the CJEU, it was therefore first necessary to assess whether the services were effectively used and enjoyed in the territory of an EU member state.
SK Telecom offered and provided the roaming services on a separate basis to persons temporarily residing in the territory of a member state — the services were separate and independent of other communications services used by those persons, and were paid for separately. The CJEU therefore held that the services were in fact effectively used and enjoyed in the territory of an EU member state during SK Telecom customers’ temporary stays.
In the case in question, therefore, the roaming services were effectively used and enjoyed in Austria. Regardless of the taxation in South Korea, Austria can be regarded as the place of supply of the services. Please note that the Czech VAT Act implements Article 59a of the Directive (the effective use and enjoyment rule) to a narrower extent than the Austrian one, so that it applies in principle only to B2B services.