State may face EU VAT bill

The Government faces a multi-million-pound bill from the EU if the European Court of Justice confirms the opinion issued yesterday by its advocate general that the State is obliged to charge VAT on toll roads and bridges.

Because VAT payments are part of the basis for calculating Ireland's contribution to EU finances, the European Commission will be entitled to demand the retrospective reimbursement of the unlevied amounts, plus interest. As the cash cannot be raised from the travelling public, it will end up as a charge against the Exchequer.

While the Commission's complaint against the non-charging on the East Link bridge in Dublin dates from 1987-88, the German advocate general, Mr Siegbert Alber, said yesterday that interest should be recoverable only from 1994. If the judgment is confirmed, the Government will also face a bill in respect of the West Link bridge.

The Government had unsuccessfully argued that the regime should not apply to tolls because they represented "the letting of immovable property", which is exempt under the VAT directive.