The Constitutional Court of Belgium annulled on Thursday a 2016 constitutional amendment under which online gambling operators were required to pay a 21% value-added tax on their Belgian operations.
Belgium regulated its online gambling market in early 2010 when amendments to the Gaming and Betting Act of 1999 were published in the Belgian Official Gazette. The amendments took effect on January 1, 2011 to allow international gambling operators to apply for licenses from the Belgian Gaming Commission and operate in a regulated environment.
In 2016, the Belgian Finance Ministry successfully advanced a bill that proposed for online gambling services to become taxable under the country’s VAT laws. The new taxation regime came into force on August 1, 2016.
Gaming and betting transactions are exempt from VAT in the most general case. The Belgian government justified its decision to change the status quo in 2016 with the need for new revenue sources and for a major boost to the country’s tax income. It was estimated that the termination of gambling and betting companies’ VAT exemption could generate the additional amount of €39 million for Belgium’s coffers.
Malta-headquartered gambling operator Kindred Group (previously Unibet Group) was among the first to comment on the latest tax developments in Belgium and the Constitutional Court decision. The company has previously challenged the introduction of VAT on online gambling operations, slamming it as “unfair” and arguing that it undermined “policy objectives” and lowered channelization by affecting consumer protection.
In a statement from earlier today, Kindred went on to say:
The ruling also points out the inherent incompatibility between consumer protection and tax revenue objectives, especially when products (lotteries vs other products) and channels (retail vs online) are treated differently.
Gambling Ads Crackdown
The Thursday ruling was certainly a big victory for Belgium-facing online gaming and betting operators. However, the country’s gambling industry suffered a heavy blow last fall, when it became known that the Belgian Chamber of Representatives has approved a proposal for the introduction of a stricter gambling advertising code.
The proposal first emerged last summer when it was tabled by Koen Geens, a Christian Democrat MP from Belgium’s Christen-Democratisch en Vlaams party. Mr. Geens criticized heavily the increased exposure of gambling services to vulnerable people, including children, through advertising and presented what he believed would be a good solution to the issue.
Mr. Geens’ plan included an outright ban on gambling-related ads during sports events broadcasts and the introduction of an 8 pm watershed. The politician and his party also called for the number of ads by each individual operator to be limited and for new measures tackling problem gambling and wider awareness of gambling-related risks to be introduced. The move was supported by the Belgian Gaming Commission.