UK's Point of Consumption Tax Challenged by GBGA in Front of European Court of Justice
The Gibraltar Betting and Gaming Association (GBGA) is making progress in its lawsuit against the UK's point of consumption (POC) tax, which was part of the new UK Gambling Act.
On Tuesday, the High Court of England and Wales announced that the issues surrounding the legality of the tax must be reviewed by the European Court of Justice (ECJ), the highest court in the European Union.
The GBGA has been adamant that the POC tax is illegal according to European law, as it goes against Article 56 of the Treaty on the Functioning of the European Union (TFEU), which guarantees the right to freely trade across borders.
Switching Strategies
The UK Gambling Act brought in a 15% tax for any gambling operator seeking to operate in the UK, requiring them to be licensed and regulated there as well. Before this, businesses had the option to be licensed in various jurisdictions around the globe, such as Gibraltar, which provided more tax advantages.
The GBGA initially fought against the act itself in the High Court, but that challenge failed in October 2014, leading to a one-month delay in the implementation of the new licensing system.
However, the organization was undaunted and reappeared in court, this time only focusing on the legality of the POC tax, not the act itself. Since this was a tax matter rather than a licensing issue, it went through a different legislative process.
Critical Questions
In the latest case, Judge Charles requested the ECJ to decide if the restrictions on providing services from Gibraltar and the taxes involved in the new regime violate Article 56. This is an issue, he said, of "constitutional importance."
The judge also asked the ECJ to evaluate whether the UK government's rationale for the new licensing regime is valid. The GBGA disagrees with the government's claim that its only objective is to safeguard consumers, insisting instead that it will push UK citizens to "rogue operators."
"If legal operators are driven to raise prices [which might translate to worse odds or a higher rake], it's unavoidable that many consumers will turn to firms with no regulation and lower costs," GBGA stated. "Rogue operators will be beyond reach of UK law and consumers will face more dangers of fraud, unpaid winnings, and exploitation."
The GBGA maintains that because there wasn't a reported increase in problem gambling since the previous regime, there was no need for reforms. They claim that the government's goal is simply to generate more revenue, not improve consumer protection, as claimed.
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