Suing the UK—Again

Gibraltar’s online gaming operators don’t want to submit to licensing in Britain or pay the country’s new “point of consumption” tax on the revenue they make there. They lost a bid in UK High Court to overturn the first. Now they’re back to try to defeat the tax.

After losing a challenge in Britain’s High Court of Justice to the country’s new licensing requirements for offshore operators, a trade group representing Gibraltar’s web gambling operators are suing again, this time to overturn the UK government’s plans to impose a 15 percent tax on revenue generated from British players wherever the operator is located.

The Gibraltar Betting and Gaming Association says this “point of consumption” tax, as it’s known, violates EU law and ultimately will harm consumers.

“(The) new tax regime breaches Article 56 of the Treaty on the Functioning of the European Union in that it amounts to a restriction on the free movement of services,” the association argues in its application for High Court review.

The tax is designed to “discourage remote gambling operators from moving to foreign jurisdictions and offering their services to UK consumers from those jurisdictions,” the GBGA claims. “This aim is contrary to the very essence of the EU rights of freedom of establishment and freedom to provide services guaranteed by Article 56.”

The association also contends the tax is “discriminatory” by subjecting EU-based operators to the possibility of double taxation—in Britain and in their home country—depending on their location.

As for consumers, the petition claims the tax would encourage a “black market” to flourish in the UK by encouraging players to seek out “companies with no regulation and lower overheads,” increasing the risk of “fraud, non-payment and abuse”.

The new requirement that all UK-facing operators must be licensed by the UK Gambling Commission commences next month under an extended deadline prompted by the GBGA’s first unsuccessful challenge. The tax, incorporated in a new Finance Act passed by Parliament this summer, kicks in on December 1.

A spokesperson for HM Revenue & Customs said, “We will robustly defend against the challenge” to the tax. “We are studying the grounds, but are confident the reforms are lawful, proportionate and non-discriminatory.”