The CJEU has ruled that EU Member States are not precluded from applying a different VAT treatment to different gambling supplies. The supplies considered in this case are:
the physical purchase of lottery tickets; and
the participation in other forms of gambling as offered online.
The applicants offer their online gambling services from Belgium. These online gambling services were exempt from VAT in Belgium until 2016, however, this exemption was later repealed. The exemption on lotteries however continued to apply.
The principle of fiscal neutrality sets out that similar services which are considered to compete with each other from the point of view of the average consumer, cannot be afforded a different VAT treatment from one another. In this respect, the applicants challenged the repealing of the exemption on the grounds that the online gambling services that they offer competed with other similar services, but had a different VAT treatment.
In its decision the CJEU took note of cases C-259/10 and C-260/10 (the Rank Judgement). In the Rank Judgement, the VAT treatment of traditional gaming machines and fixed-odds betting terminals was different. Traditional gaming machines were subject to VAT whilst fixed-odds betting terminals were exempt from VAT. This difference in treatment was successfully challenged on the grounds of fiscal neutrality.
In the Rank Judgement, the Court ruled that similar gambling services must be treated equally for VAT purposes, regardless of differences in the types of machines used. The Court reasoned that the differences between the types of gambling machines did not significantly influence the average consumer’s choice, thus requiring equal VAT treatment to avoid unfair competition.
In this case C-73/23, on the other hand, the CJEU elaborated on the reasoning in the Rank judgement. The Court determined that to assess whether the services can be deemed to be similar, it is necessary to take account of:
- the differences in the characteristics; and
- the use of the services at issue.
These services are to be viewed together with the differences attributable to the context in which those services are offered. This may create a difference in the eyes of the average consumer and crucially a difference in terms of which needs of the consumer each service is fulfilling.
Accordingly, in our view, it can be broadly concluded that Member States are not precluded by the principles of fiscal neutrality from applying a different VAT treatment to different gambling and betting supplies to the extent that the different gambling and betting supplies (whether online or otherwise) fulfil different needs of the consumer.
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