European Gaming Lawyer magazine Spring 2014 | Page 38

use of a simplified procedure which allows
them only to register for VAT in one EU
country, regardless of how many other
EU countries they are supplying (so called
mini one-stop shop – MOSS). That country
collects and distributes the VAT on behalf
of all the other countries – charged at the
applicable national rate depending where the
customer belongs.
Therefore it paid off for operators outside
Europe to establish an entity in Europe
and provide services to consumers by an
entity in Europe. To the annoyance of other
member states many companies established
subsidiaries in countries with low VAT rates
like Luxemburg (ebay, Apple, Amazon, etc.).
In this context it should be noted that
Gibraltar is not part of the EU VAT regime
and VAT wise is deemed as third country.
c. Overview current Legislation

the event that the state of residence
has exempted gambling services pursuant
to Art. 135 of the VAT Directive there is
no obligation to pay or to file VAT, neither
in the state of residence nor in other
member states.
c. Example Germany
The respective German VAT provision
in Sec. 4 Nr. 9 of the German VAT Code
provides that transactions are exempted
to the extent that they are subject to the
German Race Betting and Lottery Act.
Since sports bets are taxed under the Race
Betting and Lottery Act (sec. 17 of the Act,
tax rate 5 % on the stakes) they are exempted
from VAT. Casino games, however, are
not exempted. Since most privately held
gambling operators reside in other EU states
like Malta there is no German VAT on their
transactions at present.

Current Rules for telecommunications, broadcasting and electronic services
Services supplied by/to

EU consumer in EU country 1

EU consumer in EU country 2

Non-EU consumer

EU supplier (EU country 1)

Taxable in EU country 1

Taxable in EU country 1

No EU VAT

EU supplier (EU country 2)

Taxable in EU country 2

Taxable in EU country 2

No EU VAT

Non EU supplier

Taxable in EU country 1

Taxable in EU country 2

No EU VAT

(see http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/telecom/index_en.htm)

4. Relationship VAT –
Gaming Taxes of Member States

For operators under a license of SchleswigHolstein additional tax provisions may apply.

a. General relationship between
VAT and Gaming Taxes
Art. 135 of the VAT Directive provides
that Member States shall exempt
“betting, lotteries and other forms
of gambling, subject to the conditions
and limitations laid down by each
Member State;”

II. Changes as of January 1, 2015
There has been a great deal of criticism
which focuses on the fact that the current
rules allow businesses to take advantage of
different VAT rates applicable across the
EU. Many businesses choose Member States
with low VAT rates. At the same time, the
member states where consumption takes
place are excluded from the revenue stream.
This was one of the reasons for amending
the sourcing rules for broadcasting,
telecommunications and electronically
supplied services provided to individuals
and households established in the EU. As
from January 1, 2015 the place of supply
of telecommunications, broadcasting and
electronic services to private individuals will
be in the Member State where the customer
is established, rather than the Member State

Generally speaking EU states exempt
gambling from VAT to the extent that
such activities are subject to a specific
gambling tax.
b. Remote Gambling
Operators in Europe
As outlined above until the end of 2014 the
place of service for VAT purposes is the
place where the operators are established. In

38 | European Gaming Lawyer | Spring Issue | 2014

in which the supplier is established. This
principle will apply for services supplied by
both EU and non-EU businesses.
1. Amendment of VAT Directive by EU
Directive 2008/8/EG
Art. 5 of the EU Directive 2008/8/EG reads
as follows:
“From 1 January 2015, Directive 2006/112/
EC is hereby amended as follows: (…)
Article 58
The place of supply of the following services to
a nontaxable person shall be the place where
that person is established, has his permanent
address or usually resides:
(a) telecommunications services;
(b) radio and television broadcasting services;
(c) electronically supplied services, in
particular those referred to in Annex II.”
The destination principle which already
applies for operators outside Europe will
apply for EU businesses. Recital (3) of
Council Directive 2008/8/EC clearly states
that for all supplies of services the place of
taxation should, in principle, be the place
where the actual consumption takes place.
3. MOSS – Mini One–Stop Shop Scheme
As of January 2015, the mini one-stop shop
will be extended to telecommunications
and broadcasting and will be made available
to EU businesses, too. It will allow the
supplier, rather than register for VAT in
each Member State in which he supplies
services to his customers, to register,
declare and pay the VAT due on supplies
of telecommunications, broadcasting and
electronic services supplied to private
consumers in other Member States via a
web portal in the Member State where he is
identified and registered for VAT purposes.
Details are laid down in Council Regulation
(EU) no 967/2012 amending Implementing
Regulation (EU) No 282/2011 as regards the
special schemes for non-established taxable
persons supplying telecommunications
services, broadcasting services or electronic
services to non-taxable persons. Moreover,
the European Commission on October 23,
2013 has issued a practical guide in order
to provide a better understanding of the