The annual charge on the supply of services and networks of electronic communications (the Telecommunication Charge) is a charge that affects the telecommunications service providers, which was in effect via the 2004 Electronic Communications Law (the former version of such law, which was applicable until 2022), namely its Article 105, which established the existence of the charge, but materially put in place by Ordinance n.o 1473-B/2008, as amended from time to time, which laid out in Annex II the amounts to be paid, by the telecommunications operators and the respective calculation formulas.
These rules set out in Annex II of the Ordinance has been the object of heavy litigation since the first version of the Ordinance entered into effect , especially due to the fact that, unlike what article 165, no. 1 i), of the Portuguese Constitution lays out, the essential elements of the charge, which is in fact a financial contribution, were determined by a government ordinance, when the Constitution determines that such elements must be determined by Law approved by the Parliament.
In 2022, the Constitutional Court, in two cases regarding the Postal Service Charge[1], which is rather similar to the Telecommunications Charge and whose amounts and rates are also set out in Ordinance n.º 1473-B/2008 (Annex IX), considered that the rules of the Ordinance were contrary to the Constitution, for the exact same reasons: (i) the so-called charge was, in fact, a financial contribution, given its group-affecting nature and non-equivalency between the amounts paid and the purposes of the charge, and (ii) being a financial contribution, its essential elements, according to the Constitutional Court’s case law, must be determined by Law, and not by a government ordinance or decision.
These Constitutional Court decisions had an immediate impact on the Telecommunications Charge litigation, the operators arguing that the same reasoning applied to this charge and that it too should be deemed unconstitutional. In fact, many Tax Courts had already begun to refuse to apply the rules of the ordinance, considering the charge illegal, due to its unconstitutional nature, before any of these Constitutional Court decisions were issued.
However, the Tax Authorities still argued that, nevertheless, the Postal Service Charge and the Telecommunications Charge were substantially different and the Constitutional Court decisions were not to be applied to the latter.
Fortunately, in May of this year, the Constitutional Court issued a decision (Decision no. 244/2023), expressly considering the norms of Annex II of the Ordinance unconstitutional, and overruling the levying of this charge on the telecommunications operators, its motivation being quite close to that of Decision no. 152/2022 – Postal Service Charge – and for the exact same reasons:
- The Telecommunications Charge is not a charge per se, but a financial contribution, given its payment by the operators is merely destined to fund the supervision and regulation of the telecom sector;
- Being a financial contribution, the recent case law of the Constitutional Court considers that the elements of the contribution (rates/amounts, basis of assessment, amongst others) are also subject to the constitutional principle that they must be approved and established by Law, and not by government acts and decisions.
Thus, this charge is bound to be deemed unapplicable all the way, and Decision no. 244/2023 is likely to have started a domino-effect on the remaining litigation regarding the Telecommunications Charge.
José Miguel Saraiva
July 2023
[1] Decisions no. 152/2022 and no. 754/2022, of the Constitutional Court