TNT’s challenge to Royal Mail’s exemption from VAT, due to be heard in the ECJ on 18 June, has attracted the attention of no less than 5 Member States (in addition to the UK) because of the impact that the ECJ’s judgment will have on public postal services in the EU. The TNT case raises fundamental questions about the operation of the exemption and its interrelationship with the regulation of the postal services markets in the EU.
TNT, supported by several Member States, maintains that the exemption infringes the principle of fiscal neutrality, because it applies only to public postal services, and claims that it should either be extended to all providers of postal services or dropped entirely as a result of the liberalisation of the market for postal services in the UK. The UK and Royal Mail, supported by several other Member States, maintain that the exemption remains justified because of the special position of public postal services.
The Commission is concerned that Member States have taken different views on the scope and application of the exemption and wants the ECJ to settle the matter by basing itself upon the EU legislation liberalising the postal services market.
Paul Lasok QC is appearing for Royal Mail
Melanie Hall QC acts for the UK Government/HMRC.