© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
R1. Territorial scope
- Territorial sea of Member State: VAT applies
"[57] The national territory of the Member States within the meaning of Article 299 EC thus also consists of the territorial sea, its bed and subsoil, it being understood that it is for each Member State to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles in accordance with Article 3 of the Convention on the Law of the Sea.
[58] Accordingly, a Member State is required to subject to VAT a supply of goods which takes place in its territorial sea, on the bed thereof and in its subsoil (see also, with regard to the supply of transport services, Case C‑331/94 Commission v Greece [1996] ECR I‑2675, paragraph 10)." (Aktiebolaget NN C-111/05)
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- Exclusive economic zone + continental shelf of Member State: VAT does not apply
"[59] However, the sovereignty of the coastal State over the exclusive economic zone and the continental shelf is merely functional and, as such, is limited to the right to exercise the activities of exploration and exploitation laid down in Articles 56 and 77 of the Convention on the Law of the Sea. To the extent that the supply and laying of an undersea cable is not included in the activities listed in those articles, that part of the operation carried out in those two zones is not within the sovereignty of the coastal State. That finding is confirmed by Articles 58(1) and 79(1) of the Convention, which permit, subject to certain conditions, any State to lay undersea cables in those zones." (Aktiebolaget NN C-111/05)
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- Undersea supply and installation of fibre optic cable outside of scope to the extent not in territorial sea
"[61] The answer to the fourth question must be that Article 8(1)(a) of the Sixth Directive, read in conjunction with Articles 2(1) and 3 of that directive, must be interpreted as meaning that the supply and laying of a fibre-optic cable linking two Member States is not subject to VAT for that part of the transaction which is carried out in the exclusive economic zone, on the continental shelf and at sea." (Aktiebolaget NN C-111/05)
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