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EC Succeeds In Spanish Gambling Tax Exemption Case

by Ulrika Lomas, Tax-News.com, Brussels

13 October 2009


The European Commission has obtained judgment in its favour over an action against the Kingdom of Spain, in which it claimed that Spain's provisions exempting tax on certain lotteries and betting winnings was discriminatory and in breach of European law.

Spain applies a tax on all lottery, gaming and betting winnings in general, but exemptions apply on winnings from lotteries and betting organized by the public body Loterías y Apuestas del Estado (the Spanish public-law body in charge of lotteries and betting), by the Comunidades Autónomas (Autonomous Communities), and winnings from draws organized by the Spanish Red Cross and the Organización Nacional de Ciegos Españoles (the Spanish national association for the blind).

Spain had argued that its actions were justified for reasons of social policy, on the grounds of preventing money laundering and combating tax evasion and by objectives of consumer protection. However, the European Court of Justice held that these objectives cannot be relied upon to justify discriminatory restrictions, referring in particular to the recent judgment in Liga Portuguesa de Futebol Profissional and Bwin International as not being an appropriate precedent.

Whilst a European State may restrict tax advantages to charitable bodies, it cannot restrict such advantages only to bodies established in that State. Where a charitable body in one Member State satisfies the requirements imposed for that purpose by the law of another Member State, the authorities of that Member State cannot deny the right to equal treatment solely on the ground that it is not established in that Member State.


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