The issue of taxes has been a significant debate among member states of the European Union this year. In the northwest, the UK Gambling Commission is preparing to impose a point of consumption tax on activity from UK consumers, to be paid by online poker operators. Far to the southeast, Italy was attempting to collect taxes on tournament winnings derived outside the nation. The Union Court of Justice is still reviewing the legality of the UKGC’s actions, but has issued a ruling on the Italian case, judging in favor of poker players.
The case against Italy was brought about by two native professional poker players, Team PokerStars Pro Pier Paolo Fabretti, and 2007 EPT Dortmund runner-up, Christiano Blanco. In 2011, both Italian poker pros were targeted by the Italian tax authorities for winnings they received from playing live poker events outside of their native country. Officials said that Fabretti and Blanco failed to declare $66,000 and $610,000 respectively in international winnings dating back to 2007-2009.
OnlinePokerRealMoney.co.uk tries to dispel some legal confusions stemming from passage of George Bush's UIGEA of 2006 . Federal status seems to depend on interpretation of the wire act and other laws which were crafted many years ago and which remained high level in nature. The United Kingdom has much clearer laws including their own real money gambling commission .
Adamant that Italy had no right to tax their winnings, Fabretti and Blanco took to the provincial tax court in Rome to appeal the decision. It was then referred to the Union Court of Justice in Luxembourg for clarification of the EU constitution. According to the previous laws of the state, Italy was able to enforce a tax exemption only for players who competed and won cash prizes in poker tournaments held at land-based casino poker rooms located and licensed in the state. Essentially, players were being encouraged to play within their own jurisdiction to avoid paying income taxes on poker winnings.
According to the CJEU, however, “policy objectives cannot be used to validate discriminatory restrictions.” Italian authorities attempted to justify their taxation efforts as a legitimate way of deterring money laundering, but that argument fell on deaf ears. The Union Court of Justice ruled against Italy, putting an end to the longtime, inequitable tax exemption and freeing the Italian poker pros from their tax filing obligations.
The high courts declared that Italy’s biased tax exemption was nothing more than an obstruction to the freedom of fair trade throughout EU member states, and beyond. The official ruling reads:
“It must be borne in mind that the freedom to provide services under the EU constitution requires not only the elimination of all discrimination on grounds of nationality against providers of services established in other member states, but also the abolition of any restriction – even if it applies without distinction to national providers of services and to those from other member states – which is liable to prohibit, impede or render less attractive the activities of a provider of services established in another member state where he lawfully provides similar services.”
The ruling could foreshadow the future of the UK’s new online gambling regulations, currently scheduled to go into effect on December 1st. The UK is requiring any interactive gaming operator who intends to accept players from the region to acquire a UK license and pay a 15% POC tax. Gibraltar, the original licensor of many UK-facing online poker and casino websites, already lost one case filed against the UKGC in the high courts, but has now filed a second challenge. The Gibraltar Betting & Gaming Association is arguing that the new UK iGaming regulation are contrary to the EU constitution. The GBGA is still awaiting the results of that hearing.