UK: High Court refers POC tax legislation to the European Court of Justice

The High Court has made a reference to the Court of Justice of the European Union (“ECJ“), seeking guidance on issues raised by the British Government’s decision to impose a point-of consumption duty on gambling operators deriving revenue from UK players (“POC Tax“).

In a challenge brought by a trade body representing Gibraltar operators, questions have been raised as to the compatibility of the POC Tax with the UK’s obligations under the Treaty on the Functioning of the European Union (“TFEU“). The main issue at hand was whether offshore operators are discriminated against on the basis that they would potentially be subject to double-taxation (in the UK and in their “home” jurisidiction), while British-based operators would only pay duty in the UK but not necessarily overseas.

The High Court has asked the ECJ to consider whether the POC Tax:

  • amounts to a restriction on the provision of services from Gibraltar to the UK such that it would fall within the remit of Article 56 of the TFEU;
  • amounts to a restriction on the right to the free movement of services within the EU; and
  • can be justified in light of any such restriction.