On April 25, 2024, the ECJ issued the AG Opinion in the case C-73/23 (Chaudfontaine Loisirs).
Context: Reference for a preliminary ruling – Tax law – Value added tax – Directive 2006/112/EC – Article 135(1)(i) – Exemption of gambling – Direct effect of the exemption – Differentiation between online gambling and analogue gambling – Differentiation between various kinds of online gambling (lotteries and other forms of online gambling) – Inadmissibility of questions referred for a preliminary ruling – Temporary maintenance in force of national law without prior reference for a preliminary ruling
Article in the EU VAT Directive
Article 135
1. Member States shall exempt the following transactions:
(i) betting, lotteries and other forms of gambling, subject to the conditions and limitations laid down by each Member State;
Facts
- The Law of 1 July 2016 made online gambling, that is to say, gambling provided electronically, specially subject to VAT by repealing in its regard the exemption regime enjoyed by gambling and lotteries in general.
- An action for annulment of that special derogation was subsequently brought before the Constitutional Court alleging infringement of the national rules on competences and a breach in particular of the principle of fiscal neutrality governing the VAT Directive in that the law creates a disparity between the VAT regimes applicable to online gaming and betting, on the one hand, and ‘terrestrial’ gaming and betting and online and ‘terrestrial’ lotteries, on the other hand.
- The Constitutional Court upheld the pleas alleging infringement of the national rules on competences and took the view that there was no need to examine the other pleas in law, in particular, the plea alleging infringement of the principle of fiscal neutrality, since they could not lead to a more extensive annulment.
- The Constitutional Court therefore annulled the provisions in question of the Law of 1 July 2016 with effect from 21 May 2018, stating that the taxes paid for the period from 1 July 2016 to 21 May 2018 were maintained in view of the budgetary and administrative difficulties which would arise from their repayment (see judgments of 22 March 2018, 34/2018; and of 8 November 2018, 155/2018).
- The applicant operates an online casino. It requests reimbursement of a principal amount of EUR 640 478 825 which it paid in VAT on online gambling and betting which occurred between 1 July 2016 and 22 May 2018.
- By decision of 1 December 2020, the administration rejected that request on the ground that the conditions for bringing an action for reimbursement were not fulfilled.
Questions
- (1) Do Article 135(1)(i) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principle of fiscal neutrality permit a Member State to exclude from the benefit of the exemption contained in that provision only gambling which is provided electronically while gambling which is not provided electronically remains exempt from VAT?
- (2) Do Article 135(1)(i) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principle of fiscal neutrality permit a Member State to exclude from the benefit of the exemption contained in that provision only gambling which is provided electronically to the exclusion of lotteries which remain exempt from VAT whether or not they are provided electronically?
- (3) Does the third paragraph of Article[2]67 of the Treaty on the Functioning of the European Union permit a higher court to decide to maintain the effects of a provision of national law which it annuls because of an infringement of national law without ruling on the infringement of EU law which was also raised before it, and, therefore, without referring for a preliminary ruling the question of the compatibility of that provision of national law with EU law or asking the Court about the circumstances in which it could decide to maintain the effects of that provision in spite of its incompatibility with EU law?
- (4) If the answer to one of the previous questions is in the negative, could the Constitutional Court maintain the past effects of the provisions which it annulled because of their incompatibility with national rules on the division of powers when those provisions were also incompatible with Council VAT Directive 2006/112/EC, in order to prevent budgetary and administrative difficulties from arising from reimbursement of taxes already paid?
- (5) If the answer to the previous question is in the negative, can the taxable person be reimbursed the VAT which it has paid on the actual gross margin on the gaming and betting which it operates on the basis of provisions incompatible with Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principle of fiscal neutrality?
AG Opinion
(1) Article 135(1)(i) of the VAT Directive has no direct effect. It is neither unconditional nor sufficiently precise.
(2) The principle of neutrality of VAT does not preclude a differentiation between gambling which is provided electronically and gambling which is not provided electronically. Instead, there are objective reasons for this and for the differentiation between gambling which is provided electronically and lotteries which are organised electronically.
Decision
Summary
- Advocate General Kokott delivered an opinion on a case involving the exemption of gambling from value added tax
- The case involves differentiation between online gambling and analogue gambling, as well as various forms of online gambling
- The questions raised in the case relate to the admissibility of maintaining national law without a preliminary ruling, as well as the exemption of online gambling services from VAT
- Questions 3 and 4 were deemed inadmissible as they were not necessary for judgment in the main proceedings
- The national court must determine the need for a preliminary ruling and the relevance of questions submitted to the Court
Source
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