P&O on Friday lost an appeal concerning whether or not VAT tax should be charged on items sold on journeys between European Union (EU) states. P&O had claimed that sales of non-consumable goods on their sailings between Portsmouth and Bilbao in northern Spain should be exempt from sales tax because the ship crossed non-EU waters.
However, a High Court judge said a "clear and unambiguous" EU directive stipulated the company must pay tax on all on-board sales if passengers first embarked in an EU member country, regardless of where the actual transactions took place.
"The court's ruled against us, but we're already applying this tax regime anyway," a P&O spokeswoman said, adding that the case was "a purely legalistic test."