The European Court of Justice (ECJ) has ruled against current Italian gambling tax legislations.
The ECJ stated that Italian gambling tax laws which charge winnings from games of chance and sports betting obtained whilst playing in other EU member states were against European Union member state business and tax practices. By charging taxes on consumer’s foreign winnings, the Italian tax regime had created an unfair revenue stream
The ECJ further stated that by exempting from income tax only winnings from games of chance and sports betting obtained in Italy, Italian legislation has established different tax arrangements depending on whether the winnings are obtained in Italy or in other EU member states.
The difference in taxing would dissuade players from consuming betting and gambling products in other European Union member states, thereby giving rise to a discriminatory restriction on the freedom to provide services.
In a statement the ECJ commented that gaming providers established in Italy are subject to the tax on entertainment, which does not rid the Italian legislation of its manifestly discriminatory character, since that tax is not analogous to income tax.
The Court rejected the Italian Government’s contention that the legislation was justified to prevent money laundering and compulsive gambling. The case was heard following an appeal by two Italian taxpayers who challenged a tax assessment on winnings obtained in casinos abroad.