ECJ’s opinion: UK and Gibraltar Count as Single Member State
Gibraltar faces bitter reality as they hear the opinion of European Court Justice (ECJ) Advocate General Maciej Szupnar in their legal dispute over Point of Consumption Tax introduced by the UK in 2014. Gibraltar Betting and Gaming Association (GBGA) turned to ECJ claiming that the Point of Consumption tax represents a violation of European Union free trade law. Szupnar stated that EU law does not cover the relations between UK and Gibraltar as they are treated as a single Member State. The Court hasn’t reached the final decision but it is highly likely that it will go with Advocate General’s opinion.
The problem arose when UK introduced Point of Consumption tax in 2014 within the UK Finance Act. This meant that any operators that are to offer gambling services in the UK are to pay a tax duty. GBGA reacted to this new act deeming it unlawful and a direct breach of European laws on the freedom to provide services. After unsuccessful attempts to challenge this part of the Act at the High Court of England and Wales and the Royal Courts of Justice in London, Gibraltar Betting and Gaming Association decided to address the European Court of Justice.
GBGA turned to ECJ with the argument that this attempt to tax activities and services violates the EU law on free trade. Advocate General to ECJ, Szupnar stated his opinion that in the view of EU law Gibraltar and UK are considered as one state and therefore the European Court of Justice cannot regulate their internal disputes. Practically, this means that UK has the right to change the laws internally as long as it does not affect another EU member state. Since Gibraltar and UK are considered a single member state, GBGA’s legal challenge will in the future probably be solved in the High Court. However, all is not over yet. Even though the Court usually agrees with Advocate General’s opinion, the decision is not yet made, so there is hope for GBGA.
CEO of the Gibraltar Betting and Gaming Association, Peter Howitt, was not happy with the statement from ECJ: “We are naturally disappointed with the opinion of the Advocate General. We continue to believe that the gambling duty applied by the UK government to operators out of the jurisdiction, in circumstances where the customer may not be in the UK when they gamble or even a UK resident, is a disproportionate restriction on operators. We look forward to receiving the CJEU’s judgment on the issues.”