Gambling Compliance: European Court Of Justice To Review Italy’s Betting Duty System

European Court Of Justice To Review Italy’s Betting Duty System 12TH DEC 2018 | WRITTEN BY: NICOLA TANI IN ROME A regional tax commission in Italy has asked Europe’s top court to rule on the vexed issue of betting duty for unlicensed betting agencies, raising the prospect of a Court of Justice of the European Union (CJEU) review of two key laws that have shaped the Italian industry in recent years. What started as a seemingly routine tax law case on the issue of betting duty for land-based betting agencies last month saw the Parma county tax commission in Emilia-Romagna pass documents in the long-running case involving the Anglo-Maltese bookmaker Stanleybet to the CJEU. The referral has set alarm bells ringing because the CJEU has already declared the last three Italian betting licence tenders to be contrary to European legal principles, and this case has many of the same ingredients and protagonists. It has also created a legal uncertainty that leaves more than a thousand shops and tens of millions of euros of taxes in limbo. The referral, which was made in Parma on November 27 and filed on November 29, saw the commission raise questions over the 2015 Stability Law, which ushered in a new margin-based tax on fixed-odds betting of 18 percent for retail shops and 22 percent for online from January 1, 2016, and which required foreign betting agencies to pay tax arrears from 2011 to 2015, but at a rate three times that of the the legal operators. The betting tax change, together with a tax amnesty, was just one part of a wide-reaching budget law designed to deliver a a multibillion euro windfall from gambling taxes and licences, and fostered the participation of bookmaking firms including GoldBet, Betaland, Stanleybet and Planetwin365 that redirected business from dot.com to dot.it sites. The stakes are high for Italy’s gambling industry because the CJEU has also been asked to examine whether the earlier 2011 Stability Law was compliant with the EU Treaty. The 2011 Stability Law imposed a tax on unauthorised betting shops but not on the affiliates of state concessionaires such as Sisal, SNAI and Lottomatica so the commission in Parma asked whether this represented a “penalty” against the affiliates of a company “forced” to carry on its activities without a licence. The Parma commission also asked the CJEU whether the obligation placed on Stanleybet to pay two sets of betting duties, one in Malta and one in Italy, amounts to “an additional discrimination against European operators”. The commission observed that “foreign betting shops managed by EU operators are subject to heavier taxes than state betting shops”. Earlier this year, Stanleybet settled a series of long-running tax claims related to its pre-2011 tax liabilities. Giovanni Garrisi, the combative chief executive of Stanleybet who has prevailed in several landmark CJEU cases before, told GamblingCompliance he was hopeful of a negotiated solution in this latest case. “We are confident that the matter can be solved before the European court’s judgment which would take at least one year,” said Garrisi. Stanleybet and the Italian regulator, under the scrutiny of the Ministry of Economy and Finance, have at least begun to talk to each other. Garrisi added: “I’ve asked SNAI, Sisal and Lottomatica, who are the historic operators, to work with us and the Italian regulator to encourage the process of Stanleybet’s integration.” The pile of paperwork heading to the CJEU is substantial, with more than 1,200 Stanleybet betting shops have been assessed so far by the Italian taxman and the amount of taxes in question is counted in tens of millions of euros. Only a few days after the ruling by the tax commission in Parma, another tax commission in the southern Italian town of Bari halted a tax trial that was pending for a Stanleybet agent. The agent there had been represented in court by the seasoned Italian and CJEU lawyer Daniela Agnello. Neither the Ministry of Economy and Finance nor the Italian gambling regulator have made comments on the case, but a great deal is at stake for the Italian Treasury.