Gibraltar’s tax challenge comes to a close

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Gibraltar’s attempt to escape a UK tax on offshore betting fell at the final hurdle on Tuesday 13 March, as the EU’s top court ruled ‘the Rock’ could not be considered a separate entity for tax purposes.

 

The European Court of Justice was called to make a final decision, after Gibraltar’s Betting and Gaming Association (GBGA) argued at the UK’s high court a 15 percent tax on offshore gambling operators constituted “an unlawful restriction on the supply of services to the UK”.

The island, at the tip of Spain, plays host to the gaming operations of William Hill, Ladbrokes and Bwin.party. More than 30 groups located their online headquarters in Gibraltar before 2014, when the UK applied a 15 percent levy on operators for offshore bets placed by a UK person.

Judges at the EU’s top court ruled that under article 56 of EU law Gibraltar and the UK are a single entity for tax purposes, bursting the GBGA’s claim of an unfair restriction on trade between two EU members.

They said: “The provision of services by operators established in Gibraltar to persons established in the UK constitutes a situation confined in all respects within a single member state.”

Gambling law expert, Audrey Ferrie of Pinsent Masons, said the ruling at the European Court of Justice marked “the end of the road” for the GBGA’s legal battle.

Ferrie explained the ruling does not mean Gibraltar is literally a part of the UK, only that it cannot be considered an EU member state in its own right: “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.”

“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 GBGA’s complaint about the alleged obstacles to cross-border trade caused by the new remote gambling tax system in the UK.”


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