You are here

Revenue

7 August 2017

Add comment

Regina (The Gibraltar Betting and Gaming Association Ltd) v Revenue and Customs Commissioners and another (Government of Gibraltar intervening) (Case C-591/15) EU:C:2017:449

4 Oct 2016; 19 Jan, 13 June 2017

Court of Justice of the European Union: President K Lenaerts, Vice-President A Tizzano, Presidents of Chambers M Ilešič (Rapporteur), L Bay Larsen, T von Danwitz, Judges J Malenovský, J-C Bonichot, A Arabadjiev, C Toader, C Vajda, S Rodin, F Biltgen, K Jürimäe, Advocate General M Szpunar

Revenue — Customs and Excise — Gaming duty — Gibraltar companies providing remote gambling services — Change in rules regarding taxation of remote gaming organisations — Whether Gibraltar a “UK person” — Whether extraterritorial taxes — Whether discrimination — Finance Act 2014, ss 154, 155, 186 — FEU Treaty, arts 56FEU, 355(3)FEU

Members of the tax payer trade association were primarily Gibraltar-based operators providing remote gambling services to customers in the United Kingdom and elsewhere. Gibraltar was a colony of the British Crown but did not form part of the United Kingdom and, in relation to EU law, Gibraltar was a European territory for whose external relations a member state (the United Kingdom) was responsible within the meaning of article 355(3)FEU of the FEU Treaty. The Finance Act 2014 entered into force in the United Kingdom and imposed new gambling duties, section 154 of which defined “remote gaming” as gaming in which persons participated by the use of the internet, telephone, radio or any other kind of electronic or other technology for facilitating communication. Under section 155(1) an excise duty, known as “remote gaming duty”, was to be charged on a “chargeable person’s participation in remote gaming under arrangements between the chargeable person and another person … (‘gaming provider’)”. A “chargeable person” was defined in section 155(2) as, inter alia, “any UK person”, defined by section 186(1) as “an individual who usually lives in the United Kingdom” or “a body corporate which is legally constituted in the United Kingdom”. Pursuant to section 155(3) remote gaming duty was chargeable at the rate of 15% of “the gaming provider’s profits”. Under the previous regime for the taxation of remote gaming, providers of remote gambling services established in the United Kingdom paid tax at the rate of 15% on their gross profits, irrespective of where their customers lived, but providers of remote gambling services established in Gibraltar or elsewhere outside the United Kingdom paid no tax in the United Kingdom on gambling services provided to persons established in the United Kingdom. The tax payer brought an application for judicial review of the new tax regime in the light of EU law, arguing that the taxes payable were extraterritorial taxes which constituted an obstacle to freedom to provide services and discriminated against service providers established outside the United Kingdom. Charles J sitting in the Queen’s Bench Division (Administrative Court) [2015] EWHC 1863 (Admin); [2016] STC 151 stayed the proceedings and referred to the Court of Justice of the European Union for preliminary ruling, the question whether article 355(3)FEU, read in conjunction with article 56FEU, which prohibited restrictions on freedom to provide services within the European Union in respect of nationals of member states established in a member state other than that of the person for whom the services were intended, meant that the provision of services by operators established in Gibraltar to persons established in the United Kingdom constituted, under EU law, a situation confined in all respects within “a single member state”.

On the reference—

Held, that the fact that Gibraltar did not form part of the United Kingdom was not decisive in determining whether they should be treated as a single member state. To treat trade between Gibraltar and the United Kingdom in the same way as trade between member states would be tantamount to denying the connection, recognised in article 355(3)FEU of the FEU Treaty, between Gibraltar and the United Kingdom. It was common ground that the United Kingdom had assumed obligations towards the other member states under the Treaties so far the application and transposition of EU law in the territory of Gibraltar was concerned: Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland (Case C-30/01) [2003] ECR I-9481, paras 1 and 47 and Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland(C-349/03) [2006] STC 1944; [2005] ECR I-7321, para 56. It followed that the provision of services by operators established in Gibraltar to persons established in the United Kingdom constituted, under EU law, a situation confined in all respects within a single member state. EU law was applicable to Gibraltar, not on the basis that it formed part of the United Kingdom, but by virtue of article 355(3)FEU. It followed that article 355(3)FEU, read in conjunction with article 56FEU, meant that the provision of services by operators established in Gibraltar to persons established in the United Kingdom constituted, as a matter of EU law, a situation confined in all respects within a single member state (judgment, paras 31, 36, 42–43, 51, 56, operative part).

Appearances: Dinah Rose QC and Joe Boyd (instructed by Olswang LLP) for the tax payer. David Pannick QC, Michael Llamas QC (of Gibraltar Bar) and Ravi Mehta (instructed Mishcon de Reya) for Government of Gibraltar. Kieran Beal QC, Sarah Wilkinson and Oliver Jones (instructed by The Treasury Solicitor) for the United Kingdom Government. L Van den Broeck and M Jacobs, agents, and R Verbeke and P Vlaemminck for the Belgian Government. M Smolek, T Müller and J Vláčil, agents, for the Czech Government. Conor Power SC, and Ciarán Toland (instructed by Chief State Solicitor) for Ireland. M A Sampol Pucurull and A Rubio González, agents, for the Spanish Government. L Inez Fernandes, M Figueiredo, A Silva Coelho and P de Sousa Inês, agents, for the Portuguese Government. R Lyal and W Roels, agents, for the European Commission.

Reported by: Geraldine Fainer, barrister.

Solicitors Journal case digest is prepared by the Incorporated Council of Law Reporting for England and Wales (ICLR)

Categorised in:

Commercial

Tagged in:

tax