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GBGA to Challenge UK Point of Consumption Tax at EU Court of Justice

The Gibraltar Betting and Gaming Association (GBGA) is all set to restart their battle against the UK Point of Consumption Tax before the EU Court of Justice in Luxembourg. The POC tax was introduced in December of 2014 and the GBGA believes that its only goal was improving the UK government income.

Point of Consumption Tax in a Nutshell

The POCT introduced a new regulation, forcing online operators who accept bets from UK customers to pay a 15% tax regardless of where they are located. Naturally, this had a huge impact on those operators whose operations are located offshore.

Gibraltar and Malta were among the most affected territories, due to the fact that they host a number of big online gaming companies. The newly imposed regulation cut deeply into their profits and led to the GBGA taking a legal action against the UK, claiming that the POCT discriminates against Gibraltar-based operators.

GBGA Claims "Unlawful Restrictions"

In their case against the UK which the UK High Court forwarded to the Court of Justice of the European Union, the GBGA invokes Article 56 of the Treaty on the Functioning of the European Union. The GBGA representatives claim that 15% tax represents the breach of the mentioned article, as it imposes restrictions on the supply of services.

The EU law is quite clear on the matter. However, what is not so clear is the fact that the Article 56, and Treaty as such, only apply to full member states. The UK side claims that Gibraltar, as a territory under the control of United Kingdom, doesn't qualify as such.

Potential Implications

It will certainly take a few months before the EU court reaches its final verdict. However, the UK will be awaiting anxiously, as the decision in favor of the GBGA would have very serious financial implications.

It's not only that the UK would have to revoke their Point of Consumption Tax, but they would probably be forced to return all the income that resulted from the tax, which would be a huge blow on the country's budget.