Belgian Constitutional Court Restores VAT Exemption for Online Gambling Services
On March 22, 2018 the Constitutional Court of Belgium annulled the dispositions of an Act of 1st July 2016, according to which online gambling operators were required to pay a 21% value-added tax on their Belgian operations (decision n° 24/2018 available at www.juridat.be).
As a result of the entry into force of the Act of 2016, all online gambling and games of chance had been subject to VAT at the standard rate of 21%. On the other hand, lotteries and land-based gambling remained VAT-exempt.
The gambling operator Kindred Group (previously Unibet Group) protested against the entry into force of the new regime. The company invoked before the Belgian Constitutional Court that the new legal regime was incompatible with Belgium's laws on gaming and the law on VAT, as it discriminated against online operators and in favour of lotteries and land-based casinos.
The Belgian jurisdiction agreed with Kindred Group and annulled the litigious legal dispositions.
The company commented on the judgment, stating that "the ruling points out the inherent incompatibility between consumer protection and tax revenue objectives, especially when products (lotteries v. other products) and channels (retail v. online) are treated differently".
Even though the recent ruling appears to be a victory for online gaming and online betting firms operating in Belgium, it is precisely these companies that will be less pleased with stricter gambling advertising rules in the future aiming at further protecting citizens from the risks linked to gambling. The legislative process is still ongoing for this future legal change.
Source: U. LOMAS, “Belgian Court Annuls Online Gaming VAT” Tax-News.com, Brussels, 28 March 2018, available at https://www.tax-news.com/news/Belgian_Court_Annuls_Online_Gaming_VAT____76639.html.