(GAMBLING COMPLIANCE) Italian Supreme Court Strikes Down Betting Shop Tax Investigation
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(GAMBLING COMPLIANCE) Italian Supreme Court Strikes Down Betting Shop Tax Investigation

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Italy’s Supreme Constitutional Court has ordered tax authorities to shut down an investigation into 750 unlicensed betting shops owned by Stanleybet, ruling out the collection of tens of millions of euros in back taxes. According to a ruling published by the country’s highest court last week, although it is legitimate for the state to tax betting shop agents linked to companies not authorised in Italy, taxes cannot be collected on business conducted prior to the 2011 budget, known in Italy as a Stability Law. Betting shop proprietor Stanleybet, a perennial opponent of the Italian state, first contested the payment of a pre-2011 tax bill in 2015. The payments were largely due from agents, or dealers, who run outlets on behalf of Stanleybet. Unlicensed betting shops were offered the chance to enter the legal market following passage of the 2015 Stability Law, pending an agreement to pay a one-off fee and back taxes for their previous operations. However, the Supreme Court ruled last week that the government violated the Italian constitution by calculating that Stanleybet owed a total of 4 percent turnover tax for its pre-2011 business activities based solely on the financial results of licensed betting shops located in the same general area as the unauthorised Stanleybet equivalents. Before 2011, unlicensed shops were not subject to any form of taxation. That year a budget law was passed establishing that foreign agencies were liable for duties, although they did not have to undergo the arduous process of connecting to the regulator’s national betting database. Last week’s court ruling did find in favour of the state when it came to the collection of taxes from 2011 onwards, on the grounds that the request for payment “responds to a need for effectiveness of the principle of tax loyalty in the gaming sector”, adding that without a tax system those outside the legal framework “would end up being favoured”. It also confirmed the view that offshore companies operating betting shops via agents are still liable for taxation. ”There is no unreasonableness in the tax liability of the dealer operating for a bookmaker without a concession,” said a court statement. Foreign bookmakers have previously suggested that they instead pay taxes in the country where they have a registered office, such as Malta, Austria or Gibraltar. The case was originally submitted to the Supreme Court by the Rieti Provincial Tax Commission, with regard to ordinances issued in 2015 to four Stanleybet shops. Speaking after the verdict, Giovanni Garrisi, Stanleybet CEO, claimed victory, arguing that the case strengthens Stanleybet’s claim that it should be treated the same as betting shop operators headquartered within Italy. He also hinted that the company will continue to contest its tax liability in the European courts. “We could not expect more. The court has sorted out in our favour hundreds of cases and provided an assist to Stanleybet, equating a foreign operator with the Italian ones and considering our shop as a subject who manages the business,” said Garrisi. Stanleybet has long argued that Italian tender processes are biased in favour of local operators and has won a series of legal battles in the European courts in defence of these claims. Garrisi restated his company’s position that it pays duties abroad and continues to be discriminated against by the Italian system: “Violation of European Union treaties will quickly emerge on double taxation and other matters that I prefer not to mention at the moment. We believe that the case will soon arrive at the European Court of Justice, which will have to verify the compatibility between the Italian tax law and the European Treaty.” Stanleybet also said it will send a report to the Attorney’s Office of the Audit Court outlining what it claims are millions of wasted working hours spent by officials from AAMS parent regulator ADM, as well as financial police, on unneeded inspections and controls. Daniela Agnello, a member of the bookmaker’s legal team, along with lawyer Roberto Jacchia, argued that as a result of the court’s decision, “tributary judges will have to recognise the constitutional illegitimacy of the law and cancel the tax inspections”. 1 TOPICS: GEOGRAPHY: SECTORS: CONTENT: The Italian regulator explained to GamblingCompliance that it is waiting for a formal opinion from the Italian state legal office before cancelling all tax inspections of betting shop activity prior to 2011. According to Maurizio Ughi, former CEO of SNAI and a veteran of Italy’s betting sector: “The Italian government continues to make mistakes in the management of the betting market. It is now easy to foresee that a new case at the European Court of Justice could end with Stanleybet’s success. They will be able to claim that the discriminatory situation against them has not been solved yet.” Gambling regulator AAMS has accepted the decision with “satisfaction”, arguing that the ruling confirms “the obligation to pay the duty, even from 2011 onwards”. “This reduces the competitive advantage of those who act without concession,” said a spokesperson. Legal and Regulatory Tax Italy Land-based Gambling Betting Shops/Off Track Betting Insights &Analysis Regulatory Insights


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