FrancophonIA/JRC-Acquis_subcorpus_EL-FR_Hunalign_aligned-TMX huggingface dataset:
Greek: 26. Based on benchmarks of actual rates paid, the VOA has set the tone rate for one kilometre route of fibre at GBP 1,200/km for the London metropolitan area and GBP 1,000/km in other parts of the country. In addition, in 2001 a so called "oversupply allowance" was granted by the VOA to fibre providers assessed by the "Tone of the list" method [32] equalling a 15 % discount on the rateable value effective as of 1 April 2001 and 25 % as of 1 April 2002 [33]. According to the complainant, this was a one-off measure taking into account the chronic over-investment in fibre during the telecommunications boom and the subsequent drastic reduction in value of telecommunications networks. Accordingly, Vtesse's tax liability was around 7 % of its recurring revenues in 2003/04, and is expected to be about 10 % for 2004/05 [34]. According to UKCTA, business rates paid by other competitive providers represent a similar percentage of their revenues to that of Vtesse.
French: 26. Based on benchmarks of actual rates paid, the VOA has set the tone rate for one kilometre route of fibre at GBP 1,200/km for the London metropolitan area and GBP 1,000/km in other parts of the country. In addition, in 2001 a so called "oversupply allowance" was granted by the VOA to fibre providers assessed by the "Tone of the list" method [32] equalling a 15 % discount on the rateable value effective as of 1 April 2001 and 25 % as of 1 April 2002 [33]. According to the complainant, this was a one-off measure taking into account the chronic over-investment in fibre during the telecommunications boom and the subsequent drastic reduction in value of telecommunications networks. Accordingly, Vtesse's tax liability was around 7 % of its recurring revenues in 2003/04, and is expected to be about 10 % for 2004/05 [34]. According to UKCTA, business rates paid by other competitive providers represent a similar percentage of their revenues to that of Vtesse.
Greek: 27. While the tone rate is set at the beginning of the five year period, the tone of a kilometre route of fibre is applied each time new fibre is rented and lit. Vtesse has the obligation to regularly inform the VOA of extension to its network so that the valuation of its hereditament can be adjusted. As a consequence, whenever it procures fibre to provide services to its customers, it is liable for rates that may equal up to 20-30 % of the recurring revenues of a new contract.
French: 27. While the tone rate is set at the beginning of the five year period, the tone of a kilometre route of fibre is applied each time new fibre is rented and lit. Vtesse has the obligation to regularly inform the VOA of extension to its network so that the valuation of its hereditament can be adjusted. As a consequence, whenever it procures fibre to provide services to its customers, it is liable for rates that may equal up to 20-30 % of the recurring revenues of a new contract.
Greek: 3.4. Other operators
French: 3.4. Other operators
Greek: 28. Mercury Communications (later Cable and Wireless, "C%amp%W") was the first company to establish a nationwide telecommunications infrastructure to rival BT in the early 1980s, during the so called duopoly period. In May 2000, C%amp%W was divided into two businesses: the residential telephony, cable and internet access part was sold to cable TV operator ntl, while C%amp%W retained the UK corporate internet access business and was renamed C%amp%W UK. With the full liberalisation of the market in the 1990s, C%amp%W UK became an alternative telecoms provider competing with several other players in the market [35]. Originally C%amp%W was valued just like BT by a prescribed formulae. However, it is unclear for the Commission which valuation method is currently used for C%amp%W UK.
French: 28. Mercury Communications (later Cable and Wireless, "C%amp%W") was the first company to establish a nationwide telecommunications infrastructure to rival BT in the early 1980s, during the so called duopoly period. In May 2000, C%amp%W was divided into two businesses: the residential telephony, cable and internet access part was sold to cable TV operator ntl, while C%amp%W retained the UK corporate internet access business and was renamed C%amp%W UK. With the full liberalisation of the market in the 1990s, C%amp%W UK became an alternative telecoms provider competing with several other players in the market [35]. Originally C%amp%W was valued just like BT by a prescribed formulae. However, it is unclear for the Commission which valuation method is currently used for C%amp%W UK.
Greek: 29. Regarding other operators active on the UK market, it is the Commission's understanding that they are valued based on the "Rental" or the "Tone of the List" method [36]. According to UKCTA, alternative telecoms operators typically pay two or three times the tax, expressed as a percentage of revenues, than BT. However, the Commission currently is not in possession of exact data concerning business rates tax liabilities and relevant revenues of alternative telecommunications operators.
French: 29. Regarding other operators active on the UK market, it is the Commission's understanding that they are valued based on the "Rental" or the "Tone of the List" method [36]. According to UKCTA, alternative telecoms operators typically pay two or three times the tax, expressed as a percentage of revenues, than BT. However, the Commission currently is not in possession of exact data concerning business rates tax liabilities and relevant revenues of alternative telecommunications operators.
Greek: 4. COMPLAINT AND COMMENTS
French: 4. COMPLAINT AND COMMENTS
Greek: 30. The complainant has raised the following specific claims and concerns:
French: 30. The complainant has raised the following specific claims and concerns:
Greek: (a) Choice of methods: If BT was valued using the "Rental" or "Tone of the List" methods as is used for Vtesse, it would end-up with a substantially higher and more proportionate tax liability. It questions why the "Rental" or "Tone of the List" methods are not used for BT.
French: (a) Choice of methods: If BT was valued using the "Rental" or "Tone of the List" methods as is used for Vtesse, it would end-up with a substantially higher and more proportionate tax liability. It questions why the "Rental" or "Tone of the List" methods are not used for BT.
Greek: (b) Adjustments: In any case, the various methods should in principle yield similar results if appropriate adjustments were made. The complainant doubts whether such adjustments are made in the process of BT's valuations, given the different results.
French: (b) Adjustments: In any case, the various methods should in principle yield similar results if appropriate adjustments were made. The complainant doubts whether such adjustments are made in the process of BT's valuations, given the different results.
Greek: (c) Downward revisions: There is no downward revision in the valuation of competitors similar to that foreseen for BT to account for their eventual loss of market share or change in network topology.
French: (c) Downward revisions: There is no downward revision in the valuation of competitors similar to that foreseen for BT to account for their eventual loss of market share or change in network topology.
Greek: (d) Upward revisions: There does not seem to be a systematic upward revision of BT's valuation either, should the value of its assets increase. At the same time, Vtesse is charged incrementally, which causes an increase in the recurring price it can offer to its customers, whenever it leases new fibre, and lights this fibre to serve them. The complainant claims to have lost several contracts to BT by a small margin due to the incremental tax burden it is obliged to include in its price bid versus BT who has no such incremental burden.
French: (d) Upward revisions: There does not seem to be a systematic upward revision of BT's valuation either, should the value of its assets increase. At the same time, Vtesse is charged incrementally, which causes an increase in the recurring price it can offer to its customers, whenever it leases new fibre, and lights this fibre to serve them. The complainant claims to have lost several contracts to BT by a small margin due to the incremental tax burden it is obliged to include in its price bid versus BT who has no such incremental burden.
Greek: (e) Discretionary powers: The rating values and the valuation methods can be appealed, subject to time limits. Once an appeal has been made, typically negotiations are held to agree on an appropriate value. If no agreement is reached, it is referred to the relevant Valuation Tribunal, and at a second stage to the Lands Tribunal for determination. However, in most cases a negotiated settlement is reached. According to the complainant, the settlement signed with BT in 1995 gives the incumbent preferential treatment.
French: (e) Discretionary powers: The rating values and the valuation methods can be appealed, subject to time limits. Once an appeal has been made, typically negotiations are held to agree on an appropriate value. If no agreement is reached, it is referred to the relevant Valuation Tribunal, and at a second stage to the Lands Tribunal for determination. However, in most cases a negotiated settlement is reached. According to the complainant, the settlement signed with BT in 1995 gives the incumbent preferential treatment.
Greek: 31. It should be noted that UKCTA [37], representing various competitive telecom operators, as well as other operators' groupings, [38] have also expressed criticism to the UK authorities concerning, among others:
French: 31. It should be noted that UKCTA [37], representing various competitive telecom operators, as well as other operators' groupings, [38] have also expressed criticism to the UK authorities concerning, among others:
Greek: - the inappropriateness of applying a rating system, which was originally designed to assess buildings, to telecommunications infrastructure, including its infrequent revisions;
French: - the inappropriateness of applying a rating system, which was originally designed to assess buildings, to telecommunications infrastructure, including its infrequent revisions;
Greek: - the asymmetry of the valuation, in which different methods are applied to operators involved in the same activity, i.e. delivering telecom services, with special regard to the distinct treatment of the incumbents;
French: - the asymmetry of the valuation, in which different methods are applied to operators involved in the same activity, i.e. delivering telecom services, with special regard to the distinct treatment of the incumbents;
Greek: - the disproportionate results yielded by the use of such differential methods, i.e. BT is estimated to pay about 2-4 % of revenues [39], while its competitors typically pay several times this proportion.
French: - the disproportionate results yielded by the use of such differential methods, i.e. BT is estimated to pay about 2-4 % of revenues [39], while its competitors typically pay several times this proportion.
Greek: 32. In response to the concerns of the industry, the UK Department of Trade and Industry, in association with the Office of the Prime Minister, OFCOM (the sector regulator) and the VOA, has appointed a contractor to review the rating system as it applies to telecommunications companies, including possible effects on competition. The expert was due to report back during the summer of 2004. However, according to the UK authorities, due to last minute unforeseen circumstances, this report has not yet been completed and could not be published.
French: 32. In response to the concerns of the industry, the UK Department of Trade and Industry, in association with the Office of the Prime Minister, OFCOM (the sector regulator) and the VOA, has appointed a contractor to review the rating system as it applies to telecommunications companies, including possible effects on competition. The expert was due to report back during the summer of 2004. However, according to the UK authorities, due to last minute unforeseen circumstances, this report has not yet been completed and could not be published.
Greek: 5. ASSESSMENT
French: 5. ASSESSMENT
Greek: 5.1. Existence of aid
French: 5.1. Existence of aid
Greek: 33. According to Article 87(1) of the EC Treaty any State aid granted by a Member State or through State resources in any form whatsoever which distorts competition or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market. According to the Commission's notice on the application of the State aid rules to measures relating to direct business taxation, tax benefits restricted to certain types of undertakings, insofar as they favour certain undertakings or the production of certain goods, may constitute State aid [40].
French: 33. According to Article 87(1) of the EC Treaty any State aid granted by a Member State or through State resources in any form whatsoever which distorts competition or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market. According to the Commission's notice on the application of the State aid rules to measures relating to direct business taxation, tax benefits restricted to certain types of undertakings, insofar as they favour certain undertakings or the production of certain goods, may constitute State aid [40].
Greek: State resources
French: State resources
Greek: 34. In applying Community rules, State resources can be in "any form whatsoever", including tax measures such as a reduction in the tax base. If and when there is a reduction in a tax burden compared to the general system, State resources are at stake. The relative reduction of the business rates tax burden lowers the tax revenues of local authorities and hence is equivalent to the use of State resources in the form of fiscal expenditure.
French: 34. In applying Community rules, State resources can be in "any form whatsoever", including tax measures such as a reduction in the tax base. If and when there is a reduction in a tax burden compared to the general system, State resources are at stake. The relative reduction of the business rates tax burden lowers the tax revenues of local authorities and hence is equivalent to the use of State resources in the form of fiscal expenditure.
Greek: Selective advantage
French: Selective advantage
Greek: 35. A reduction in the tax base, and consequently the level of taxation, that a telecommunications operator is liable for, confers an advantage upon that undertaking in that it reduces the costs that that undertaking would normally bear in the course of its business. This seems to be the case for BT and Kingston Communications, which benefit from a reduced tax base compared to other operators.
French: 35. A reduction in the tax base, and consequently the level of taxation, that a telecommunications operator is liable for, confers an advantage upon that undertaking in that it reduces the costs that that undertaking would normally bear in the course of its business. This seems to be the case for BT and Kingston Communications, which benefit from a reduced tax base compared to other operators.
Greek: 36. The reasons behind this discriminatory taxation appear to be the application of a particular asset valuation method to BT and Kingston Communications, while applying a different method to other operators. Even if the method applied, including the corresponding revision mechanism, is foreseen in the relevant legislation as one of the possible approaches, the non-uniformity of the system and the discretionary powers given to the VOA to apply the general provisions to specific operators, while deciding to treat other operators differently, may lead to a selective advantage to a certain undertaking, while disadvantaging others who compete on the same market.
French: 36. The reasons behind this discriminatory taxation appear to be the application of a particular asset valuation method to BT and Kingston Communications, while applying a different method to other operators. Even if the method applied, including the corresponding revision mechanism, is foreseen in the relevant legislation as one of the possible approaches, the non-uniformity of the system and the discretionary powers given to the VOA to apply the general provisions to specific operators, while deciding to treat other operators differently, may lead to a selective advantage to a certain undertaking, while disadvantaging others who compete on the same market.
Greek: 37. The justifications given by the UK authorities for applying the "Receipt and Expenditure" method to BT are:
French: 37. The justifications given by the UK authorities for applying the "Receipt and Expenditure" method to BT are:
Greek: (a) Asset ownership: BT owns 98 % of its infrastructure and does not pay rent for it which could serve as a basis for the "Rental" method.
French: (a) Asset ownership: BT owns 98 % of its infrastructure and does not pay rent for it which could serve as a basis for the "Rental" method.
Greek: (b) Size and diversity of infrastructure: There is no network as large, or nearly as large, and as diverse as BT's. There are no comparable operators whose rental values could serve as benchmarks.
French: (b) Size and diversity of infrastructure: There is no network as large, or nearly as large, and as diverse as BT's. There are no comparable operators whose rental values could serve as benchmarks.
Greek: (c) The necessity to value "as a whole":BT's assessment is not made up of valuing many small parts and adding them together, but it has to be valued as a whole. Benchmarks on rental values of particular network elements are irrelevant.
French: (c) The necessity to value "as a whole":BT's assessment is not made up of valuing many small parts and adding them together, but it has to be valued as a whole. Benchmarks on rental values of particular network elements are irrelevant.
Greek: (d) Special obligations: The full value of BT's network is "depressed" by its onerous licence conditions such as its universal service obligations ("USO") and price cap regulations. Vtesse, on the other hand, does not have USO [41].
French: (d) Special obligations: The full value of BT's network is "depressed" by its onerous licence conditions such as its universal service obligations ("USO") and price cap regulations. Vtesse, on the other hand, does not have USO [41].
Greek: 38. As stated in the Commission's abovementioned notice on direct business taxation, the presence of aid may be ruled out where the different nature of the measure is justified by the nature and general scheme of the system. In line with the case-law of the Court of Justice [42], the Commission has continued to take the view that this justification must be based on the intrinsic features and inherent logic of the tax system. In the case at hand, however, the Commission has doubts about the validity of such arguments, and in particular:
French: 38. As stated in the Commission's abovementioned notice on direct business taxation, the presence of aid may be ruled out where the different nature of the measure is justified by the nature and general scheme of the system. In line with the case-law of the Court of Justice [42], the Commission has continued to take the view that this justification must be based on the intrinsic features and inherent logic of the tax system. In the case at hand, however, the Commission has doubts about the validity of such arguments, and in particular:
Greek: 39. Asset ownership: The UK authorities stated that the "Rental" method can only apply to lessees (and not lessors). However, the rent received by BT when renting out its own infrastructure could serve as guidance for the value of the network. Moreover, BT's retail business units themselves effectively rent infrastructure and buy network services from BT Wholesale, the business unit that manages BT's infrastructure. The internal transfer prices between BT's retail businesses and BT Wholesale could provide a basis, or at least a benchmark, for estimating the rental value, with appropriate adjustments for network services (provided, of course, that those prices are set at arms length).
French: 39. Asset ownership: The UK authorities stated that the "Rental" method can only apply to lessees (and not lessors). However, the rent received by BT when renting out its own infrastructure could serve as guidance for the value of the network. Moreover, BT's retail business units themselves effectively rent infrastructure and buy network services from BT Wholesale, the business unit that manages BT's infrastructure. The internal transfer prices between BT's retail businesses and BT Wholesale could provide a basis, or at least a benchmark, for estimating the rental value, with appropriate adjustments for network services (provided, of course, that those prices are set at arms length).
Greek: 40. Size and diversity of infrastructure: Such argumentation tends to suggest that bigger companies deserve reduced or digressive rates of taxation. This statement appears to be incompatible with the Commission's position in previous fiscal aid cases stipulating that nothing justified preferential treatment in favour of large companies [43]. Moreover, if the logic of the business rates property tax system is to assess the value of infrastructure, the size of the company should not be taken into consideration during the valuation process. In any case, the cable TV companies in the UK are also active in the telecommunications market, especially residential and, similarly to BT, have both an access and a backbone network. Their taxation level could also serve as a benchmark [44].
French: 40. Size and diversity of infrastructure: Such argumentation tends to suggest that bigger companies deserve reduced or digressive rates of taxation. This statement appears to be incompatible with the Commission's position in previous fiscal aid cases stipulating that nothing justified preferential treatment in favour of large companies [43]. Moreover, if the logic of the business rates property tax system is to assess the value of infrastructure, the size of the company should not be taken into consideration during the valuation process. In any case, the cable TV companies in the UK are also active in the telecommunications market, especially residential and, similarly to BT, have both an access and a backbone network. Their taxation level could also serve as a benchmark [44].
Greek: 41. The necessity to value "as a whole": The UK was a forerunner in telecoms liberalisation, account separation and tariff regulation based on the cost-orientation of BT's tariffs. For these purposes, OFCOM, the UK regulatory authority, and its predecessor OFTEL, have been systematically collecting cost accounting data from BT since the 1980s. BT itself and OFCOM are in possession of detailed cost accounting data for BT's network. This data could be used to determine the taxable value of BT's network, at least to verify the assessment of the tax authorities. Moreover, liberalisation and network element unbundling have resulted in a variety of wholesale products which could serve as benchmarks for valuing the rental value of various infrastructure elements.
French: 41. The necessity to value "as a whole": The UK was a forerunner in telecoms liberalisation, account separation and tariff regulation based on the cost-orientation of BT's tariffs. For these purposes, OFCOM, the UK regulatory authority, and its predecessor OFTEL, have been systematically collecting cost accounting data from BT since the 1980s. BT itself and OFCOM are in possession of detailed cost accounting data for BT's network. This data could be used to determine the taxable value of BT's network, at least to verify the assessment of the tax authorities. Moreover, liberalisation and network element unbundling have resulted in a variety of wholesale products which could serve as benchmarks for valuing the rental value of various infrastructure elements.