Irish motorists will avoid a touted increased cost of as much of 60c every time they use the M50 or Port Tunnel and they have the EU to thank.

The European Court of Justice has ruled that VAT should not be applied to tolls on State-owned motorways in a decision that has unexpectedly gone against the Revenue Commissioners, the Irish Times reports.

The introduction of VAT would have increased the charge at the M50 toll for drivers with a tag from €2.10 to €2.40, while those without a tag would have faced a 60c increase to €3.20 per journey.

Revenue was of the opinion that this tax should be added to the existing charge, a stance that was disputed by the Department of Transport and Transport Infrastructure Ireland (TII). The long-running disagreement initially arose in May 2010 when Revenue instructed the National Roads Authority (the TII's predecessor) to apply VAT to the tolls, with appeals being launched immediately.

The judgement arrived on Thursday and said:

“A body governed by public law which carries on an activity consisting in providing access to a road on payment of a toll may not be regarded as competing with private operators who collect tolls on other toll roads pursuant to an agreement with a public law body concerned under national statutory provisions."

As a result, VAT should not be charged.

This verdict runs contrary to the initial opinion passed down by the ECJ's advocate general 

As a consequence, according to the European Court of Justice, VAT should not apply on tolls on these roads.

Though the TII has been paying the VAT owed to Revenue since the 2010 direction, the actual tolls did not rise by 23%, meaning the body has been carrying the cost pending a decision. It has paid roughly €70m to date and it remains unclear whether TII will get this money back. The VAT element from toll receipts will be removed from 2018.