VAT treatment of online gambling services

Abstract: Online gambling as a field has created a variety of legal challenges in the EU. One of the challenges is the application of VAT on online gambling services. The topics which have been concerning EU Member States in relation to VAT and online gambling are the scope of electronically supplied services in relation to online gambling, the taxable amount of online gambling, and the correct implementation of the exemptions on gambling under the VAT Directive. The scope of gambling in the EU has to be evaluated in the light of the gambling laws of the Member States since there is a lack of harmonization on the EU level on the definitions of gambling and games of chance. The scope of electronically supplied services is also defined broadly which requires a detail-oriented approach, especially, regarding whether the human intervention in the supply of gambling services is more than minimal. The determination of taxable amount for VAT purposes could also prove to be difficult due to the large variety of online gambling games that are available online. The exemption from the VAT for gambling and exclusion of that exemption for electronically supplied services under the VAT Directive could lead to infringement of the principle of fiscal neutrality if similar supplies are taxed differently for VAT purposes. The point of view of the average consumer is the decisive element in evaluating whether two supplies are considered similar and whether the principle of fiscal neutrality is infringed. The pending case-law of the CJEU will clarify the VAT treatment of two similar supplies of gambling where one of the supplies is provided offline and the other online.