Portugal referred to Court Of Justice

Under past rules, income earned in Portugal in the form of prizes or winnings from competitions, games or gambling was subject to taxation with the only exemption applying to those spoils from Euromilhoes E Liga Dos Milhoes, which are games organized by the Santa Casa Da Misericordia De Lisboa, a body that carries out activities of social interest.

Portugal amended its tax code in December following a reasoned opinion sent by the Commission in September to also exempt winnings from the European EuroMillions network, which includes EuroMillions lotteries from Belgium, France, Ireland, Luxembourg, Portugal, Spain, the UK and Switzerland. However, Portugal did not extend the tax exemption to all foreign state lotteries with these continuing to be taxed.

In a statement released last week, the Commission revealed that Portugal’s current rules, although recently amended, remained contrary to the European Commission Treaty and the European Economic Area because they restrict the freedom to provide equivalent services. The Commission also stated that taxing the winnings from foreign lotteries while exempting national competitions could not be justified as a way of avoiding problem gambling.