BELGIAN CONSTITUTIONAL COURT: ONLINE OPERATORS TO BE VAT-EXEMPT
Massive step closer to another legal victory of the Industry was taken in Belgium, whose Constitutional Court, declared that the country’s online licensees have so far been unconstitutionally subject to the provisions of value-added taxation (VAT).
The scope of the Court’s assessment and judgment has been the Belgian Gaming bill, passed and confirmed by Parliament back in December 2016, which put online gambling operators under the scope of Belgium’s 21 percent VAT as well, in addition to the mandatory 11-percent gaming tax levy.
The Court’s key point of reference, upon overturning the applicability of VAT system to rendering of online gambling services, was the CJEU’s 2010 decision, in which it was ascertained that gambling products are not convenient for being applied to VAT, as compared to other type of more or less similar services.
The supreme legal authority also considered economic impacts of such unfavourable and discriminating VAT provision, summarizing that, if a 21% percent tax to online gambling transactions is added as an additional levy to online operators, such offer gets less attractive and less competitive for the customers, thus resulting in decreased public incomes, besides the evident infringement of the Belgian regional tax regulations.
It was also pointed out that the government ignored the provisions of EU VAT Directive, which strictly regulated that betting, lotteries and other forms of gambling should be VAT-excluded.
Upon approaching the Constitutional Court, the Council had questioned whether the said provisions would meet with principles of proportionality and whether they violated the allocation of power between federal and regional government.
This decision marks the second legal defeat for the Belgium government, having in mind last month the CJEU rejected its complaint that practical guidelines, published in 2014 by the European Commission, overruled the sovereignty of member states to regulate online gambling activities.
