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10/7/09 -The European Court of Justice has found that a Spanish government tax law on gambling winnings to which the European Commission had objected, is flawed and discriminatory.
In a decision handed down on October 6 in Case number C153/08, the ECJ first chamber ruled against Spain concerning its tax exemption related to winnings.
The case was referred to the ECJ by the European Commission and concerned legislation taxing winnings from all types of lotteries, games and betting organised outside the Kingdom of Spain. However, winnings from lotteries, games and betting organised within Spain by certain not-for-profit or social welfare bodies were exempted from the tax.
The Advocate-general's conclusions were that the action should be partially accepted. By maintaining in force tax legislation that does not apply to public bodies and entities that carry out activities of a social or not-for-profit nature established in another member state and pursuing the same objectives as the Spanish entities concerned, Spain had failed to respect the freedom to provide services and infringed the principle of non-discrimination on basis of nationality, the Court found.
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Also, in the Gambelli case, the ECJ ruled that Articles 43 and 49 of the EC Treaty - covering the freedom to establish a business and the freedom to sell services across borders respectively – applied to gaming services.
In the Placanica case, the ruling emphasizes that regulation cannot be a smokescreen for discriminatory trade practices and make clear that sneaky attempts by member states to circumvent the free movement of services to protect local favorites will not be tolerated.
However, national governments still have considerable latitude to determine how and when to regulate the gaming sector, provided that measures enacted were proportionate to the perceived social ills associated with gambling.
Though these rulings continue to push the EU for equitable treatment between the member states, as many EU states have local monopolies to protect, the truth is that national governments still try to force their own laws in the gambling sector.
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