This case was focused on charges levied on customers who did not pay their telecoms bill by BACS or direct debit. The charges were invoiced separately to customers. T-Mobile argued the charge should be exempt from VAT as a payment handling service. The ECJ disagreed with this viewpoint, stating that the charge should be regarded as ancilliary to the VATable supply of telecoms services, on the basis the charge is not distinct and independent from the principal supply.
The circumstances of this case differ slightly from those in the recent ECJ decision in AXA/Denplan as T-Mobile is providing the telecoms and payment handling service as principal. It is therefore relatively clear as to why the court arrived at its decision.
The same cannot be said of the AXA/Denplan decision however which has raised more issues than it has resolved and impacts a broad range of industries including travel agents, ticket agencies, clearing houses, charity fund raising companies – it remains to be seen how the AXA/Denplan decision will be adopted in practice.
For further advice on this contact Julie Park, Director