Today’s highly interesting EU Court of Justice Advocate General’s opinion in Case C-591/15 clarifies UK and Gibraltar relationship when it comes to the provision gambling services.
Advocate General Szpunar Opinion in the case opposing the Gibraltar Betting and Gaming Association Limited v Commissioners for Her Majesty’s Revenue and Customs Her Majesty’s Treasury considers that the UK and Gibraltar are a single Member State for the purposes of the freedom to provide gambling services.
In 2014 the UK adopted a new tax regime for certain gambling duties, requiring gambling services providers to pay a gaming duty in respect of all remote games of chance placed with them by UK consumers, regardless of the tax paid in their own jurisdiction. This New Tax Regime replaced the previous taxation regime under which only service providers established in the UK were charged gambling duties on their gross gambling profits from their supply of gaming services to customers worldwide.
The Gibraltar Betting and Gaming Association challenged the New Tax Regime before the High Court of England and Wales on the basis that the tax is contrary to the freedom to provide services enshrined under Article 56 of the Treaty on the Functioning of the European Union.
The High Court asks the Court of Justice whether, for the purposes of the freedom to provide services, Gibraltar and the UK are to be treated as if they were part of a single Member State or whether, with respect to the freedom to provide services, Gibraltar has the constitutional status of a separate territory to the UK so that the provision of services between the two is to be treated as intra-EU trade.
In its’ Opinion, Advocate General Szpunar takes the view that the application of EU law to Gibraltar does not create new or supplementary rights between the UK and Gibraltar that are in addition to those flowing from UK and Gibraltar constitutional law and for the purposes of the freedom to provide services such as gambling, Gibraltar and the UK are to be treated as one entity.
Should the Court on the contrary concludes that the freedom to provide services does apply to trade between Gibraltar and the UK, the Advocate General considers that the New Tax Regime does not constitute a restriction to that freedom as it imposes domestic gambling duties applying indistinctly to service providers. In any case, it is for the High Court to determine whether the grounds of justification invoked by the UK, namely to level the playing field between UK and overseas operators and to ensure that the UK can exercise proper fiscal supervision over the gaming market, are suitable and necessary to attaining what they set out to achieve.
In the event the EU Court of Justice ruling will follow the Advocate General’s Opinion , it would also clarify the negative Brexit impact on Gibraltar’s based gambling companies and certification suppliers operating as licensees in other jurisdictions such as in Italy on the basis of their belonging to the EU and European Economic Area.
