European Court of Justice Advocate General Maciej Szpunar has dealt a blow to the legal challenge brought by the Gibraltar Betting and Gaming Association (GBGA) against the UK HMRC’s 2014 new tax regime on online gambling duties.
Detailing his opinion on GBGA’s ongoing challenge, Szpunar stated that British overseas territory Gibraltar and the UK should be treated as ‘one entity’ with regards to business services. Gibraltar can therefore not exempt betting operators from the UK government’s industry charges or related policies.
The GBGA has brought its tax challenge to EU courts, stating that the UK government has breached EU laws relating to businesses being able to provide ‘free movement of services’, one of the four fundamental pillars of EU business policy.
Defending its stance, HMRC has stated that GBGA cannot challenge its industry duty as business policy between the UK and Gibraltar is not covered by EU law. Whilst Gibraltar may be an independent state, it is represented within the EU by the UK and can therefore not challenge business policy on ‘free movement of services’.
Issuing an opinion note on GBGA’s challenge, Szpunar backs the UK position stating: “I propose that the provisions of the New Tax Regime which are contested in the present case should not be regarded as a restriction on the freedom to provide services, given that they apply without distinction and on a non-discriminatory basis to gambling service providers located in the UK and elsewhere.”
Should Szpunar’s opinion be upheld, this will likely cause Gibraltar’s government further concerns following this week’s confirmation by UK PM Theresa May that the United Kingdom would leave the EU Single Market and renegotiate commercial terms with the EU Customs Union.
Gibraltar has become a digital and financial services hub for numerous European businesses. At present, the British overseas territory has over 4000 employees working in the online gambling sector as Gibraltar’s largest employer (population 32,000).
Should Gibraltar be treated as an entity of the UK, it will face significant challenges in maintaining commercial and competition protections and its registered companies servicing EU member states post the UK’s exit from the Single Market.