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Gibraltar Betting and Gaming Association Vs. UK Poc Tax

Tuesday July 14,2015 :  GBGA WINS CJEU REFERRAL ON POC TAX REGIME (Update)

Judge determines room for opinion by European Union courts.

The Gibraltar Betting and Gaming Association’s persistence has paid off regarding its fight against the UK Government’s recent implementation of new remote gambling legislation and its point of consumption (POC) tax regime, according to International law firm Olswang who is representing the association.

The judgement handed down today (Tuesday) by Mr Justice Charles of the High Court of Justice of England and Wales has referred the UK remote gambling legislation to the Court of Justice of the European Union (CJEU) saying: “there should be a reference to the Court of Justice of the European Union on important issues concerning the legality of a tax imposed on overseas gambling operators.”

The GBGA initiated proceedings for a judicial review on the legislation back in October 2014 believing that the tax regime flouted European Union law, specifically Article 56 of the Treaty on the Functioning of the European Union

According to Olswang, Mr Justice Charles made his ruling based on the following issues being put forward to the CJEU:

-   “Whether a restriction on the provision of services from Gibraltar to the United Kingdom engages the right to free movement protected by Article 56 TFEU. Mr Justice Charles held that this was an issue of constitutional importance.

-   Whether the taxes payable under the new tax regime constitute restrictions on the right to the free movement of services for the purposes of Article 56 TFEU. HMRC had argued that in order for a tax measure to be a restriction for the purposes of Article 56 TFEU it is necessary for it to be discriminatory. Mr Justice Charles held that in this regard HMRC had relied on a principle of law which has no clear precedent in European law.

-   Whether the aims relied on by the UK Government to justify the new tax regime are legitimate. The reasons given by the UK Government for the new tax regime included addressing a perceived competitive advantage for overseas operators and increasing UK tax revenue.”

Olswang informs the next stage will be a formal reference by the High Court to the Court of Justice of the European Union for determination.

“The case raises important questions for the future of online gambling in the UK,” commented Dan Tench, Head of Public Law at Olswang LLP.  “It also touches on broader issues about the UK Government's ability to tax businesses outside its jurisdiction. We look forward to these issues being considered by the Court of Justice of the European Union."

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