ECJ rules a case on the right to charge VAT on road tolls

The ECJ recently ruled a case concerning the right of public entities to charge VAT on road tolls.

2 April, 2017


The ECJ weights VAT on road tolls

The case concerned an Irish motorway run by a state-owned operator (National Roads Authority). Initially, the advocate general proposed that VAT should also be charged on these tolls, however the ECJ decided that VAT was not due on the grounds of no direct competition between the public and private entities managing motorways in Ireland. According to the European Court of Justice, there is no direct competition between private and public entities where the roads and service provided is clearly separated.

What exactly are toll services?

Toll services are often subcontracted to foreign businesses who provide this service to transport companies covering distances abroad. In most countries, this service is considered related to immoveable property according to Article 47 of the VAT Directive, hence requiring a foreign business to register for VAT in the country where the toll infrastructure is located. The rules on the scope of immoveable property service and domestic reverse charge rules make it difficult in practice to comply with local VAT regulations in countries where the foreign company does not have any physical presence.


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