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ECJ: From VAT Cases of ECJ – One Transaction or Multiple Transactions in VAT? Part 5

Case C‑276/09 of Everything Everywhere Ltd. FactsUK-seated telecommunication company Everything Everywhere provides mobile telephone services.

For the payment of the telephone services, the company offers various choices of payment to its clients: a pre-payment and a number of subsequent payment options (such as, for example, bankcard, telephone, internet or cheque payment).
In the case of most of the subsequent payment options, the company charged a so-called “separate payment handling charge" to its clients as a fee payable for a separate service. Everything Everywhere took the view that the payment handling service must be treated as an activity separate from the mobile telephone services and, for this reason, it classified this activity as tax exempt (as an intermediary service relating to financial transactions).
The British authorities, however, found that the services formed an integrated unit and were therefore taxable.

Main question asked from the European Court of Justice

Should payment handling services exempt from taxation, invoiced in relation to mobile telephone services be regarded as a separate service?

The decision

ECB ruled that the mobile telephone service provided by Everything Everywhere is to be regarded as the main service if provided to an average consumer. However, the use of the payment handling services relating to the invoices of the service cannot be regarded as a stand-alone purpose of the customers as they did not intend to acquire two separate services. For this reason, in the case of telecommunication services, the payment handling activity constitutes part of the telecommunication service.
This is because the situation of Everything Everywhere is completely different from that of economic players providing tax-exempt payment handling services as a financial service, being their main service.
Similarly to the ECJ case C-41/04 Levob, this once again confirms that the fact that a separate price is quoted for payment handling services, in itself, is not decisive in this regard.
ECJ pointed out that from the perspective of analysing whether the payment handling activity is an auxiliary activity or a stand-alone one, we have to take into account whether the payment handling activity relates to a supply of service for consideration, i.e. whether it comes with the service supplied.


Based on this case, we can summarize the characteristics of complex transactions in the following non-exhaustive and conclusive list:

  • The telecommunication service as the main purpose of the transactions and the relating, auxiliary payment handling service have to be regarded as a single supply of service.
  • The service qualifies as a single service even if, as a result, the auxiliary, tax-exempt payment handling service becomes taxable.
  • The auxiliary nature of the payment handling activity is confirmed by the fact that this service is provided in relation to a supply of service for a certain consideration and comes with such service.
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