A Belgian court overturned a law that imposed value added tax (VAT) on online gambling in the country, owing to the challenges raised by several high-profile gaming operators.

Thus, the ruling by the Belgian Constitutional Court overturned the 2016 amendment introduced by the Belgian Finance Ministry that ended a VAT exemption for gaming operators.

Introduced on August 1st, 2016, this amendment called for  licensees to pay an additional 21 per cent tax on Belgian operations with the anticipations  to generate €75m per year  for the government.

This  triggered  legal challenges from a diverse range of companies, including European operators Kindred Group, Casinos Austria International, and PokerStars who were  were backed up  by local brands Carousel, betFIRST, and Casino Belgium, accompanied by  the government of Belgium’s French-speaking Walloon Region.

The operators emphasized  that with lotteries still exempt from paying VAT on activities, the move distorted competition in the market.

They also pointed out that despite creating additional tax revenue in the short-term, it could reduce gaming tax in the long-term. With escalated  costs making it more expensive, and less attractive, to operate in Belgium, it was creating a situation in which unlicensed operators could thrive, they said.

This argument was supported by the Walloon Government, which also argued that by removing the VAT exemption for gambling the federal government had encroached on the freedoms of the regional authorities.

The Constitutional Court accepted the arguments and scrapped the VAT provision for gaming companies.

However, it said, VAT paid on Belgian operations since August 2016 would not be reimbursed.

“Given the budgetary and administrative difficulties that would arise from the reimbursement of taxes already paid, it is therefore necessary to permanently maintain the effects of the provisions set aside,” the court explicated.

Kindred Group welcomed the court’s decision, saying that it highlighted the incompatibility of consumer protection and tax revenue objectives, especially when products and channels are taxed at different rates.

“For any gambling policy to succeed and with the ‘better offer one click away’, locally regulated online operators must be able to provide services of equivalent value to end consumers as services provided by competitors in the global digital world,” the operator said.

“Kindred remains a strong advocate of sustainable regulation based upon a borderless digital market and channelling consumer demand to licensed offerings. We look forward to working with national and international policy makers and regulators to ensure gaming policy is sustainable and fact based.”

SOURCE: GamingIntelligence