State’s failure to implement EU toll ruling costing €15m a year

A difference of opinion between State agencies over the charging of VAT on road tolls that is costing the National Roads Authority (NRA) €15 million a year has been referred back to the European courts.

The disagreement centres on differing interpretations of a European Court of Justice ruling in 2010 which claimed the State had failed to implement EU VAT legislation correctly and that exempting tolls on State-owned motorways (the M50 and Dublin Port Tunnel) constituted an unfair advantage over private operators.

In May 2010 the Revenue Commissioners moved to impose VAT on State-owned motorway tolls but this decision was immediately appealed by the Department of Transport and the NRA.

The matter was referred to the Revenue Appeals Commissioner which adjudicates on revenue disputes.

Since the Revenue decision, the NRA has been paying the VAT on behalf of motorists at a cost of €15 million per annum or more than €55 million to date.

Direct competition

It is understood the appeals commissioner’s findings broadly supported the NRA’s position, which is there is no direct competition between tolled roads serving the capital and as a result no competition issues arise.

While the appeals commissioner has completed his work, the case has now been referred back to the European Court of Justice for it to consider a number of legal points.

There is two-year backlog on cases waiting to be dealt with by this court meaning a final decision on the issue is unlikely before 2017.

A spokesman for the NRA said no additional exchequer funds had been provided to the NRA to cover the cost of paying the VAT which meant the money being used to cover the VAT on tolls was being taken from the roads budget.

That €55 million spent to date on VAT could have been used for road maintenance.

If the current VAT rate were applied to M50 tolls, the charge for a car with a toll tag would rise by 48 cent to €2.58 and by 71 cent to €3.81 for a car without an account. Toll charges at the Dublin Port Tunnel would also increase from €10 to €12.30 during peak journey times and from €3 to €3.69 during off-peak.