The small European territory of Gibraltar seemingly looks set to lose a legal challenge currently before the Court Of Justice For The European Union against the 15% point-of-consumption tax levied by the government of the United Kingdom on all online gambling operator revenues.
Implemented in December of 2014 via the Finance Act, the levy applies to all remote gaming and betting activities carried out by players based in the United Kingdom and its passage angered the many online operators based in Gibraltar, which had been charged a far lower 1% tax up to that point. This prompted the Gibraltar Betting And Gaming Association to take its opposition to the new duty to the High Court in London before that body conveniently ruled last year that the matter should be heard by the Luxembourg-based Court Of Justice For The European Union.
At least 55% of the online gambling services provided to customers based in the United Kingdom are supplied by Gibraltarian firms and the Gibraltar Betting And Gaming Association argued that the new tax regime broke European Union laws and was not applicable because it hindered member states from freely providing cross-border goods and services.
Although the Court Of Justice For The European Union has yet to rule on the matter brought against Her Majesty’s Revenue And Customs and a final decision not expected for many months, it normally follows the advice of its Advocate General. The current occupant of the job, Maciej Szpunar, explained via a preliminary decision issued on Thursday that the United Kingdom and Gibraltar should be treated as “one entity” in freedom to provide goods and services disputes.
“The application of European Union law to Gibraltar does not create new or supplementary rights between the United Kingdom and Gibraltar that are in addition to those flowing from United Kingdom and Gibraltar constitutional law,” wrote the Pole in his decision.
Gibraltar is classed as a British Overseas Territory and has been ruled in some manner by the United Kingdom since 1713. However, a 2006 reform gave the 1,664-acre enclave almost complete internal democratic self-government through the establishment an elected parliament while London remains responsible for defense, foreign affairs, internal security and general good governance matters.
In the event that the Court Of Justice For The European Union concludes that the freedom to provide goods and services stipulation does apply between Gibraltar and the United Kingdom, Szpunar wrote that he did not consider the point-of-consumption tax to be a restriction and that it would be up to the referring court, in this case the High Court, to determine whether there was a “level playing field” and take measures to ensure that London could “exercise proper fiscal supervision over its gaming market”.
“We are naturally disappointed with the opinion of the Advocate General,” read a statement from Peter Howitt, Chief Executive Officer for the Gibraltar Betting And Gaming Association. “We continue to believe that the gambling duty applied by the United Kingdom government to operators out of the jurisdiction, in circumstances where the customer may not be in the United Kingdom when they gamble or even a United Kingdom resident, is a disproportionate restriction on operators. We look forward to receiving the Court Of Justice For The European Union’s judgment on the issues.”