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The High Court has decided to refer a number of significant questions to the Court of Justice of the European Union (CJEU) in relation to the constitutional status of Gibraltar in EU law and the principles governing the application of the free movement of services to taxation.

The case arises out of a challenge by the Claimant, a company incorporated in Gibraltar and representing a number of gambling operators based in that territory, to the new United Kingdom regime for certain gambling duties introduced by Part 3 and Schedules 27, 28 and 29 of the Finance Act 2014 (“FA 2014”). These provisions came into force on 17 July 2014 and introduced a “point of consumption” regime making duties payable for any services provided to persons ordinarily resident in the United Kingdom, in contrast to the previous “point of supply”.

The GBGA alleged that the new regime is an unjustified interference with the freedom to provide services within the European Union, guaranteed by Article 56 TFEU.

The Defendants argued that:
1. The Claimant has no enforceable EU rights as the movement of services between Gibraltar and the UK is not caught by EU law;
2. As an indistinctly applicable tax measure, the new regime cannot be said to be a restriction within the meaning of Article 56; and
3. In any event it is justified by the need to rationalise the UK’s tax regime.

Mr Justice Charles considered that a number of issues were unclear as a matter of EU law, and therefore that a reference to the CJEU was necessary. The consequential Order is yet to be determined.

The relevant gambling duties became payable with effect from 1 December 2014. The GBGA also challenges the associated notices and guidance (“the HMRC Guidance”) issued by the national taxation authority, the Commissioners for her Majesty’s Revenue and Customs (“HMRC”).

The judgment can be found here:

Dinah Rose QC, Brian Kennelly and Jessica Boyd act for the Claimant.

Kieron Beal QC and Sarah Wilkinson act for the Defendants.

Lord Pannick QC and Ravi Mehta act for Her Majesty's Government Of Gibraltar, which intervened in relation to the constitutional issue.