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.

The participants of ELC 2016, the International Conference in the field of gaming taxation held in the organisation of the European Organisation for Gaming Law – EOGL in Belgrade on 15th June 2016 agree that taxation of games of chance must not favor one kind of the games over any other and the law regulating the taxation must enable equal market conditions for the companies to compete.

The games of chance have huge contribution within any economy because they engage a large numer of providers in their regular functioning, primarily in the IT sector in the domain of software and hardware production, the production of furniture and media industry, etc. Finally and probably the most important, the industry of gaming employs a large number of young people.

Therefore, the participants of the Conference think that the manner in which the state authorities tax the winnings in the games of chance is bad, primarily for the players and, consequently, for the providers as well.

It was concluded that this regulation is exclusively intended for taxation of sports betting shops thus creating an inequality on the market as one kind of the games of chance is put in an unfavorable position to the point of the company closure, which is in opposition to the EU rules and directives in this field. Besides, numerous regulations referring to the consumer protection are also violated.

The participants confirmed that the attitude of the state authorities that additional taxation of sports betting shops will increase the budgetary revenues simply have no realistic base. On the contrary, the total amount of taxation revenues will decrease because the sports betting will be brought to the lowest level of profitability, which will further lead to closure of betting shops within 12 months. So, the state will no longer receive the existing taxation revenues and numerous employees in the industry will lose their jobs.

Nothing must be deducted from either players’ stakes or winnings because this will drive them to foreign websites or illegal providers with no such taxation. Domestic legal providers will cease to be competitive. Nobody has ever managed to prevent the players to bet where they want by technical or legal measures. The countries successful in this filed actually try to create best possible business conditions for the operators of the games of chance and consequently for their own budgetary revenues.

The players are also reluctant to accept such taxation and in only four days the Serbian Association of Gaming Providers (UPIS) managed to collect 108,000 signatures of adult citizens of the Republic of Serbia in order to initiate a procedure in the Serbian Parliament to abandon taxation of winnings in the games of chance.

Conclusions: 

• Participants of the International Conference support the initiative of 108,000 adult citizens of the Republic of Serbia to abandon taxation of all winnings in the games of chance and think that this initiative must be put on the agenda of the Serbian Parliament urgently.
• Participants call the state authorities of Serbia and Bosnia and Herzegovina to understand the harmfulness of taxation of all players of the games of chance as such taxation will destroy the legal industry of gaming, decrease the taxation budgetary revenues and drive the players towards illegal websites.
• It is necessary to urgently include the operators in the working groups of the Ministries of Finance of the Republic of Serbia and Bosnia and Herzegovina in order to create a quality legal solution for the games of chance which would regulate all fees and taxes in the field of this business activity.