High Court refers UK point of consuption tax regime to Europe

The legality of taxes imposed on overseas gambling operators by the UK government has been challenged in the High Court in London.

Olswang, a law company retained by the Gibraltar Betting and Gaming Association, has won a case that determines that decisions on tax should be dealt with by the European Court of Justice.

Mr Justice Charles handed down the decision that the UK tax on online gambling raises issues of European law that can only be decided by the ECJ.

The challenge began in October 2014, when the GBGA instructed Olswang to issue judicial review proceedings on the lawfulness of the new tax regime. The association claimed that the tax was discriminatory and restricted the free movement of services, against the Treaty on the Functioning of the EU. The government of Gibraltar subsequently lent its weight to the legal challenge.

The High Court agreed with the Association and with the Gibraltar government that the case raised issues of constitutional importance for Gibraltar and that the UK’s tax authorities had relied on a principle of law which had no clear precedent in European law.

The case will now go to the ECJ and, if it finds in favour of the Association and the Gibraltar Government, then it is possible that the taxes raised so far will have to be returned to the operators.

Dan Tench, head of public law at Olswang, said: "The case raises important questions for the future of online gambling in the UK. It also touches on broader issues about the UK government's ability to tax businesses outside its jurisdiction. We look forward to these issues being considered by the Court of Justice of the EU."