The European Court of Justice has rejected claims by some of Europe's largest mobile phone companies for billions of euros in tax refunds.
Vodafone, Telefonica, Deutsche Telekom, France Telecom and Hutchison Whampoa tried to reclaim £3.3 billion (€4.9 billion) they said they had paid in VAT when Britain sold five mobile phone licences for £22.5 billion (€33.41 billion) in 2000.
A second case led by Germany's Deutsche Telekom in Austria was also dismissed. This effectively ended any chance of success for a similar claim pending in Germany, where six operators paid €50.5 billion on third-generation licences.
Companies argued they should be able to reclaim tax on 3G licence costs, which totalled more than €100 billion across Europe around seven years ago, partly because subscribers, rather than the companies, were the final consumers.
But after a three-year legal battle, the European Court of Justice ruled that only economic activity was subject to VAT taxation.
It said the auction of licences did not constitute an "economic activity". The sale was not a simple commercial transaction as governments also regulate airwaves.
The cases will now be referred back to governments for a final decision and implementation.