Maciej Szpunar, an Advocate General of the highest court of the European Union said that Gibraltar should be treated as “one entity” with the UK when it comes to their right to provide services. The opinion of Szpunar has been presented in a case between the UK’s tax authority and the Gibraltar Betting and Gaming Association (GBGA).
The advocate general wrote that the application of European Union law to Gibraltar did not create new or supplementary rights between Gibraltar and the UK apart from the ones imposed by the constitutional law. Normally, the European Court of Justice follows its advocate generals’ line of thinking, but still, it is not obliged to follow their rulings. It is expected to make a final ruling on the case over the upcoming months.
The Point of Consumption tax has already taken effect, so the extra costs have been already hitting companies that operate in the local gambling industry. The Gibraltar Betting and Gaming Association has previously commented on the tax, explaining that it sees it as a disproportionate restriction of operators. That is why the GBGA is waiting to get the court’s judgement of the matter.
Over the case, the high court of the UK asked the European Court of Justice if Gibraltar could be treated as a separate territory to Great Britain in terms of the gambling tax regime of the UK. To this, Advocate General Szpunar reacted that it was the referring court that was entitled to determine if the grounds of justification could be used to guarantee proper fiscal monitoring and control over the gaming market and were used in the most suitable way.
The interference of the European Union in the tax affairs of the UK is a sensitive matter, especially considering the fact that the country has announced the BREXIT decision in the summer of 2016 and has threatened to become a low-tax destination.
Just to make the situation even more complicated, the state aid investigators of the European Commission have started probes of the tax regime of Gibraltar. The the investigation has been initiated on suspicions that the territory of Gibraltar has been offering tax deals under favourable conditions in order to attract more companies from other European markets. The probe had been opposed by the UK and Gibraltar, and the latter has filed a legal challenge.
The electronic gambling industry of Gibraltar has been lately flourishing and has even turned into one of the key contributors to its economy. At the same time, the UK has revealed some new taxes, which have initiated a lot of discussions whether or not Britain is trying to tax services that should be part of the free movement of people, goods and capital on the European Union market.
According to the advocate general of the European Court of Justice, the UK has the right to impose the domestic tax, which is not covered by the current legislation within the European Union.
- Author
Daniel Williams
