European Gaming Lawyer magazine Autumn 2016 | Page 15

though the event takes place in one of them only. An apportionment would be expected, though the basis for that is not determined under EU law so that effectively each Member State is in competition for a share of the VAT revenue with no binding basis for apportionment on EU wide basis being in place, and no Member State being bound by the decisions of the Courts in another. Compliance In principle, a gambling operator would have to register for VAT in each country in which it has private consumers, unless of course that country exempts the gambling in question. That requirement presents a considerable compliance burden. This can be somewhat mitigated by the One Stop Shop (“OSS”) registration facility. Put simply, this allows registration in one Member State only, through which VAT for each other Member State is collected (at the rate in each such Member State) and accounted for to the host country. The OSS host Member State then passes the VAT collected to the other Member States via a clearing/settlement system to be operated by the EU. The operator still has to deal with various VAT rates and have in place auditable systems to ensure proper accounting and linkage of customers to the right country. Brexit As has been explained, the rules at EU level are somewhat elastic: they allow considerable latitude for Member States in terms of the scope of exemption for betting/ gambling and in taking measures to protect national VAT revenues. EU law also allows national gambling taxes, Brexit itself therefore has no indications for UK national policy in this regard. As a matter of national policy, the UK has applied the VAT exemption very widely: Group 4 of Schedule 9 to the VAT Act 1994 provides for exemption, without limitation, of “The provision of any facilities for the placing of bets or the playing of any games of chance for a prize”. Brexit itself has no discernable impact on this policy, but neither did EU membership. The UK has signalled that it may apply “use and enjoyment” measures to ensure taxation of services provided to offshore gambling operators but, again, Brexit itself is unlikely to impact this policy, though the UK could extend its effect to EU based operators. This will of course depend on the UK’s relationship with the single market following Brexit. One clear implication for Brexit will be that the UK will not be able to host the OSS registration for an offshore operator. They will therefore have to find another Member State home in the EU and register the OSS there. Conclusions The landscape is complex. At present EU law allows for significant diversions of approach in Member States, particularly as to the scope for exemption and also for protectionist supply relocation measures to safeguard national revenues. The broad range of discretions available to Member States mean that harmonisation of the EU market is someway off and, of course, following Brexit the UK is unlikely to be a full member of that market. Dario Garcia is a Consultant in the Tax Litigation Team at Mishcon de Reya LLP. He is a leading practitioner in indirect taxes, particularly in financial services. [email protected] European Gaming Lawyer | Autumn Issue | 2016 | 15