This case deals with the place of supply of services and by consequence the recovery of VAT incurred on the acquisition or importation of goods connected with the supply of telecommunications services between taxable persons resident in different Member States.

The taxpayer EGN, an Italian subsidiary of EGN Equant Global Network BV, a company constituted under Dutch law, supplied telecommunications services to Ensys Ltd, a company established and subject to VAT in Ireland. The services were not subject to Italian VAT as Italy was authorised by way of derogation from article 9(1) of the Sixth Directive to treat telecommunications services as “reverse charge” services. EGN applied to the Italian Revenue Authority for a refund of VAT for 1999 and a refund of the outstanding credit for preceding years. The application was refused on the grounds that the conditions for deduction or refund of the unpaid VAT were not met.

The Italian domestic appeal process lent to the case being referred to the ECJ. The main question was whether it is permissible under Article 17(3)(a) of the Sixth Directive for the supplier of telecommunications services, which is established in the territory of a Member State, to deduct or obtain a refund of input VAT on telecommunications services where those services have been supplied to a recipient established in another Member State.

The ECJ held that the supply of telecommunications services in this case falls within the specific place of supply criteria contained in Article 9(2)(e) of the Sixth Directive. If the customer is a taxable person established in a Member State but not in the same country as the supplier, the place of supply where telecom munications services are performed is the place where the customer has established his business or has a fixed establishment to which the service is supplied or where he has his permanent address or usually resides.

Since the customer Ensys Ltd is established in Ireland, the services provided by EGN must be regarded as having been ‘carried out in another country’ and so they must give rise to deduction or refund of input VAT since such services would give rise to such a right if they had been performed in the territory of the same Member State.

In summary, the ECJ acknowledged that EGN is entitled under Article 17(3)(a) of the Sixth Council Directive to deduct or obtain a refund of input VAT in Italy on telecommunications service that have been supplied to Ensys Ltd, since EGN would have had that right if the services had been supplied in Italy.

The determination is available on-line at http://www.bailii.org/cgi-bin/markupcgi?doc=/eu/cases/EUECJ/2009/C37708.html&query=EGN+and+BV&method=boolean