LUXEMBOURG (CN) – Taxes on betting in Italy do not constitute discrimination against companies based in other countries, the European Union’s highest court ruled Wednesday.
The case involving one of the EU’s largest betting companies, Stanleybet, was sent to the European Court of Justice by Italian tax authorities after the British company complained that an 8 million euro ($8.7 million) tax bill was illegal.
The Luxembourg-based court held Wednesday that because the tax “applies to all operators who manage bets collected on Italian territory, without making a distinction on the basis of the place of establishment of those operators…the imposition of that tax on Stanleybet Malta cannot be regarded as discriminatory.”
Founded in Northern Ireland in 1958, Stanleybet operates so-called data transmission centers, or DTCs, in Italy. In Italy, gamblers can place bets at licensed betting shops and also at DTCs, which operate essentially as internet cafes where gamblers can place bets online.
In 2016, the Italian finance ministry sent the tax bill to Stanleybet for transactions that took place between 2011 and 2015. Under Italian law, all betting transactions, even those involving entities that are established abroad, are subject to a tax.
The gambling company contested the bill, claiming because its headquarters are located on Malta, an island nation located between Italy and Tunisia, it was being double taxed. Malta is an EU member state and taxed these transactions as well. The Provincial Tax Commission of Parma referred the case to the EU’s highest court.
One of the principal legal concepts of the 27-member political and economic union is that it is illegal to discriminate on the basis of nationality. However, member states are allowed to impose taxes as they see fit, so long as the assessments comply with EU law.
According to the five-judge panel, countries are not obligated to alter their own systems to ensure double taxation within the EU doesn’t occur.
Stanleybet isn’t a stranger to the European Court of Justice. It won a groundbreaking case against Italy in 2003, known as the Gambelli case, which held that gambling constituted a service under EU law and cross-border betting services couldn’t be blocked from national markets. In a 2007 case known as Placanica, a second landmark ruling against Italy, the court found that the Italian government couldn’t impose restrictions on a foreign company that it wasn’t imposing on domestic ones.
The company’s luck hasn’t always held. It lost another case in 2015, also involving Italy, over the length of betting licenses and lost again in 2018 after alleging that the tender system for the Italian national lottery was illegal.
The taxation case will now be returned to the Italian national courts for a final ruling.