The Gibraltar Betting and Gaming Association Ltd, R (on the application of) v HM Revenue and Customs & Ors

A national court should refer questions to the CJEU where their answers are necessary to determine the claim, the facts are sufficiently defined, and the relevant EU-law principles are not acte clair. The characterisation of a tax for the purposes of Article 56 TFEU requires analysis of its nature and economic effect, rather than reliance on a convenient label such as point-of-consumption or point-of-supply tax. A representative claimant with sufficient interest may seek a declaration of incompatibility even if it has no directly effective EU-law right and its members have an alternative tax appeal route.

The claimant, a trade association representing mainly Gibraltar-based remote gambling operators, challenged the remote gambling tax regime introduced by Part 3 and Schedules 28 and 29 of the Finance Act 2014. It alleged incompatibility with Article 56 TFEU. The defendants raised preliminary, constitutional and substantive Article 56 objections.

The constitutional questions concerned Gibraltar’s status for Article 56 purposes. The Article 56 questions concerned the nature of the tax, discrimination, double taxation and justification. The court also considered whether the claim should be refused because of an alternative remedy and whether the claimant could challenge the legislation without directly effective EU-law rights.

1. Reference to the CJEU. The court exercised its discretion under Article 267 TFEU to refer both the constitutional issues and the Article 56 issues. A reference was appropriate because the answers were necessary to determine the proceedings, the factual situation was sufficiently defined, and the questions were not acte clair. The potential general importance of the Article 56 issues and the likelihood of a future reference also supported an early comprehensive reference.
2. Constitutional issues. The court declined to resolve whether Gibraltar and the United Kingdom constitute one Member State for Article 56 purposes, whether Gibraltar should be treated as a Member State or equivalent territory, or whether it is a third country or territory. The earlier decision in Gibraltar Betting and Gaming Association Ltd v Secretary of State for Culture, Media and Sport, [2014] EWHC 3236 (Admin); [2015] 1 CMLR 28, had addressed these matters only obiter.
3. Characterisation of the tax. The essential question was whether the new duty was an internal tax connected with consumption in the UK, or an external tax on part of a provider’s income. The court held that the rival arguments had force and that existing case law did not provide clear guidance. The duty identified and taxed a defined net return from an identified market, calculated uniformly for all providers supplying UK persons. Its analogy with VAT supported, but did not finally establish, the point-of-consumption characterisation.
4. Discrimination and justification. The court referred the questions whether indistinctly applicable internal taxation infringes Article 56 only where it discriminates in law or fact, and how double taxation and differential treatment of spread-betting and betting-exchange operators affect that issue. It also left the fiscal-sovereignty and justification questions for the CJEU.
5. Preliminary objections. The alternative-remedy objection failed. The claimant was not itself a taxpayer and could only challenge the legislation by judicial review. The existence of a tax appeal available to its members did not require refusal of a claim brought by a party with sufficient interest. The court also held that the claimant could seek a declaration of incompatibility without directly effective EU-law rights, distinguishing ICI v Colmer (Inspector of Taxes) No 2, [1999] 1 WLR 2035, and relying on (R) EOC v Secretary of State for Employment, [1995] 1 AC 1.

This was a first-instance judicial review. The judgment records the earlier Administrative Court decision in Gibraltar Betting and Gaming Association Ltd v Secretary of State for Culture, Media and Sport, [2014] EWHC 3236 (Admin); [2015] 1 CMLR 28, which dismissed a challenge to the regulatory framework and addressed the constitutional issues only obiter.