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Legal challenge against remote gambling tax in the UK falters before EU court

A legal challenge brought against changes to the way remote gambling operations are taxed in the UK has faltered before the EU's highest court.13 Jun 2017

Reforms delivered under the Finance Act in 2014 mean that gambling operators are obliged to pay a 15% levy on remote gaming and betting activities carried out with a 'UK person', regardless of whether those operators are based in the UK or not.

The Gibraltar Betting and Gaming Association (GBGA) applied for a judicial review of the new tax regime before the High Court in London. It argued, in essence, that gambling operators based in Gibraltar should not be subject to tax obligations in the UK.

Specifically, the GGBA claimed that the UK remote gambling tax regime represented a restriction on the freedom to provide services in the EU, as provided for in the Treaty on the Functioning of the EU, and was therefore discriminatory against non-UK based operators.

In July 2015, the High Court referred legal questions relevant to the GGBA's legal challenge, relating to the status of Gibraltar and its relationship with the UK and EU, to the Court of Justice for the EU (CJEU) to resolve.

In its newly issued judgment, the CJEU has confirmed that, for the purposes of EU law, services provided by Gibraltar-based gambling operators to consumers in the UK are to be considered services delivered in the context of a single EU member state.

Gambling law expert Audrey Ferrie of Pinsent Masons, the law firm behind Out-Law.com, said the judgment may well signal "the end of the road" for the GGBA's legal challenge.

"The CJEU's ruling acknowledged that Gibraltar is not part of the UK, but found that Gibraltar should not be considered to be an EU member state in its own right," Ferrie said. "Rather, it said its ties to Britain in EU treaties mean that, for EU law purposes, services provided by Gibraltar-based gambling operators to UK-based consumers should be considered as being delivered within the same jurisdiction. This cuts across the GGBA's complaint about the alleged obstacles to cross-border trade caused by the new remote gambling tax system in the UK."

The High Court still has to apply the CJEU's ruling to the specific facts of the case brought before it by the GGBA.