The European Court of Justice ruled on Tuesday that mobile operators are not able to claim back billions of Euros they paid in taxes when they bought 3G licenses.

Today’s ruling only concerns the claims of mobile operators in the UK and Austria but is likely to set a precedent for similar claims throughout Europe.

In 2000, 3G licences were allocated to a handful of operators for a total sum of £22.5bn (Eur38bn) in the UK and Eur831.6m in Austria. Operators in the UK and Germany were trying to claim back somewhere in the region of £3.9bn and Eur145m respectively.

However, the Radiocommunications Agency of the UK and the Austrian Telekom-Control-Kommission had argued that there was no tax component to the licence fees and the referring national courts ask the Court of Justice whether the Sixth VAT Directive imposes a duty to tax the public auctioning of those licences.

Today, the Court holds that the allocation of rights to use the frequencies in question “does not constitute an ‘economic activity’ within the meaning of the Sixth VAT Directive. Thus, that activity does not fall within the scope of the Sixth VAT Directive.”