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