Brussels, 10/06/2010 (Agence Europe) - In a decision made on Thursday 10 June in Case C-58/09, the European Court of Justice (ECJ) ruled that member states can exempt certain gaming activities from VAT because they are allowed to set the conditions and limitations on tax exemptions themselves.
The ECJ has subsequently interpreted Article 135§1 i) of Directive 2006/112/EC of the Council on a common system of value added tax. It was responding to a preliminary issue from the German court of auditors, which asked whether member states are allowed to introduce regulation exempting certain betting activities from VAT (horseracing bets in certain cases) and certain lotteries, whilst “all the other gaming and betting activities” were excluded from this exemption.
In its considerations underlining this ruling, the ECJ pointed out that exemption benefiting bets, lotteries and other gaming is due to practical considerations - it is difficult to impose VAT on gaming operations - and not because of a desire to ensure that these activities receive more favourable VAT conditions, which is the case for certain provisions of services of general interest in the social sector. This is the criterion with which it should examine “whether member states can legitimately limit the field of application for VAT exemption … in such a way that only a minority part of it, determined by the number of gaming activities authorised, or the turnover that these activities generate in the countries concerned, can benefit from this exemption”. In this connection, Article 135 of the directive leaves a considerable amount of leeway for member states to decide whether to exempt or tax the activities concerned, when they set the conditions and limits on which the benefit of this exemption can be subordinated.
This interpretation is particularly important in a context where the provision of gaming activities is developing and rapidly diversifying in Europe. (F.G./transl.fl)