European Union’s Court of Justice (CJEU) has ruled against Gibraltar in the legal dispute between the UK and the British Overseas Territory. According to the ruling of the CJEU, Gibraltar and the UK must be treated as a single EU member state in terms of certain aspects of the EU law.
Previously, the Gibraltar Betting and Gaming Association (GBGA) has filed a petition to be considered a separate EU member state from the UK. The request has come as part of an ongoing tax dispute between the UK Her Majesty’s Revenue and Customs (HMRC) and the GBGA.
The legal challenge between the two parties has started as Gibraltar opposed to the regulatory changes brought to the taxation of the remote gambling operators in the UK. According to the changes which were delivered with the Finance Act in 2014, a 15% levy was imposed on gambling operators’ remote gaming and betting activities, no matter if the companies are based on the territory of the UK or not.
As a result, an application for a judicial review of the new tax regime was filed by the Gibraltar Betting and Gaming Association before the High Court. The trade association argued the new tax regime, saying that the Gibraltar-based gambling operators should not be subjected to the tax obligations set in the UK.
According to the claims of the GBGA, the remote gambling tax regime in the UK came as a restriction imposed on the services provision freedom within the EU and discriminated the gambling operators that were not based in the UK. In addition, the Gibraltar Betting and Gaming Association claims that the law change resulted in double taxation for the local online gambling operators.
Almost two years ago, in July 2015, the High Court referred to the European Union’s Court of Justice in terms of the legal challenge related to Gibraltar’s status. Now, the CJEU has confirmed that Gibraltar and the UK should be treated as a single EU member country, and hence the services provided by gambling companies based in Gibraltar to UK customers should be considered services delivered in the same country. In other words, the 15% levy is applicable to Gibraltar-based online gambling operators, too.
Despite its ruling against Gibraltar in the latter’s legal dispute with the UK, the Court of Justice for the European Union explained that the decision is not intended to undermine the status of Gibraltar as a separate and distinct territory. For some time now, the future of Gibraltar has fired some of the most heated discussions related to the BREXIT talks. At the same time, Spain has claimed sovereignty over Gibraltar, and has been interested being offered a right of veto over the EU-Gibraltar relationship.
The decision of the UK to exit the European Union has been considered as a turning point for the status of Gibraltar in the future, as it could seriously harm the profitable gambling industry that has been flourishing there.
- Author
Daniel Williams
