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Use and enjoyment – a double charge to tax?

Indirect Tax Matters June 2021

The Court of Justice of the European Union (the 'CJEU') delivered its decision in SK Telecom (C-593/19) on 15 April 2021. While the case relates to telecommunication services, it will be of relevance for any situations where use and / or enjoyment provisions are at issue. It also, once again, leads us to consider what the CJEU views as constituting a supply of services.


SK Telecom, a telco established in South Korea, provided ‘roaming services’ to its non-business customers whilst they were physically located in Austria. For example, this would have occurred where one of those customers used their mobile phone while they were holidaying in Austria.

EU law provides Member States with the option of implementing domestic legislation to tax the use and / or enjoyment of certain services (including telecommunication services, hiring of movable goods, hiring of means of transport, certain financial services etc.) in their jurisdiction. These provisions centre on a non-EU to EU basis, and vice versa i.e. the provisions do not apply between EU Member States.

Such measures are designed to prevent non-taxation, double taxation or distortions of competition.

The supply by SK Telecom to its customers was subject to tax in South Korea, even where the services were used and / or enjoyed in Austria. Austria had implemented the optional measure that allowed it to tax such services in Austria.

The CJEU was asked to consider whether the roaming services constituted use and / or enjoyment, and, if so, could a charge to Austrian VAT arise given that a charge to South Korean tax also arose (i.e. two charges to taxation). The CJEU has followed the AG’s Opinion by answering points in the affirmative. With the latter, it has been held that the tax treatment outside the EU is irrelevant and does not preclude a Member State from taxing such services. Accordingly, despite a charge to South Korean tax arising, Austria was entitled to subject the same services to Austrian VAT.

There are a number of other issues in this case, but we see the above as being of most relevance.

Suggested actions

  • Assess whether any of your transactions are affected;
  • Consider whether you are indirectly involved in transactions of this nature. For example, where your business’s customers’ customers are using and enjoying services in Ireland;
  • Quantify any possible exposure and decide on actions to regularise your position;
  • Consider possible defences or alternative approaches.

Should you have any queries on this article’s contents or would like our assistance with dealing with any taxation issue, please feel free to contact us.

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