In 2013, the European Court of Justice was questioned by the Tax Court of Rome with a reference for a preliminary ruling in the national dispute opposing the Italian tax Authority to Mr. Cristiano Blanco and Mr. Pier Paolo Fabretti, accused of failing to declare various winnings obtained in casinos abroad.
The question was about the interpretation of European Union Treaty principles in light of the obligation for persons resident in Italy to be required to declare for tax purposes, and be liable for tax on, winnings obtained from casinos in Member States of the European Union, as provided for by Italian laws.
While defendants claimed that the tax assessments infringe the principle of non-discrimination since winnings obtained from casinos obtained in Italy are exempt from tax, the Italian authorities considered, in turn, that the national legislation is aimed at preventing money laundering abroad – limiting the flow of capital abroad (or the arrival in Italy) of capital whose origin is uncertain – and combat compulsive gambling.
According to today’s Court ruling:
- it is a restriction to the freedom to provide services EU Treaty principle taxing winnings from games of chance obtained in other Member States although it exempts such winnings obtained on its territory. This is not a surprise as the European Court of Justice had ruled in 2003 a precedent for a lotteries winnings taxation case (Lindman judgment);
- this restriction is not justified on grounds of public policy, public security or public health, pursuant to Article 46 of the EC Treaty. In particular, the Court has the opportunity to hold that it is inconsistent for a Member State wishing to combat compulsive gambling, on one hand, to tax consumers who participate in games of chance in other Member States and, on the other hand, to exempt those same consumers if they participate in games of chance in Italy. Such an exemption is likely to have the effect of encouraging consumers to participate in games of chance and is therefore not suitable for ensuring that that objective be attained.
It is now for the national courts to dispose of the case in accordance with the Court’s judgment.