The new Portuguese online. gambling tax regime in a. constitutional context. António Moura Portugal. 1 December 2015

Transcription

1 The new Portuguese online gambling tax regime in a constitutional context António Moura Portugal 1 December 2015

2 Legal framework and tax objectives Legal framework for online betting (Decree-Law 66/2015 or RJO) Liberal regime (provision of online betting and gambling is not reserved to some entities; availability subject to licensing procedure) Decree-Law 66/2015 contemplates three kinds of online gambling and betting: i) games of chance ii) fixed-odds sports bets iii) horse racing bets, whether fixed-odds or totalisator Taxation of online gambling is seen as regulatory instrument, following the logic set for land based games of chance (preamble of RJO)

3 Common taxation models for online gambling Customer stakes Tax on stakes 2 main forms of online gambling taxation Prizes Awarded (Pay-out to costumer) GGR Gross Gaming Revenue (operator revenue) Tax on GGR

4 Portuguese online gambling tax rules (articles 87º - 91º RJO) Taxation of online gambling and betting income occurs under a special tax (IEJO special online gambling tax), which replaces any other taxes, general or local; Three sets of rules depending on the nature of the game: i) Games of chance (GGR) GGR is taxed at 15% rate. If annual GGR sup. to 5M, revenue exceeding this amount will be subject to additional tax up to a limit of 30% (cap) ii) Fixed odds sports betting (stakes tax) tax is based on the operator s revenues resulting from the amount of bets made (no deduction of winnings) at an 8% rate; if annual stakes exceed 30M, revenue exceeding 30M will be subject to additional tax up to a limit of 16% (cap) iii) Horse racing bets fixed odds horse racing betting [GGR same as i)] and for mutual horse racing bets [stakes tax same as ii) above]

5 General income tax rules vs. Offline gambling tax rules CIT (IRC) General rule for taxation of income by legal persons: corporate income tax (IRC) levied on profits; Gambling income has been traditionally excluded from the scope of corporate income tax (exclusion rule) and subject to a special tax on gambling ( IEJ ) STAMP DUTY Mutual betting and State s social games operated exclusively by Santa Casa da Misericórdia de Lisboa (SCML) are subject to stamp duty at 4,5% rate levied on the value of the bet plus an amount that may go up to 20% rate to the amount exceeding 5, SPECIAL GAMBLING TAX (IEJ) Casinos (operating based on concession agreements entered into with the State) that explore land-based chance games are subject to IEJ (with different rules for table games and non-table games)

6 Active Role of the Portuguese Constitutional Court

7 Stakes tax on sports betting: Violation of principle of neutrality? Tax regimes applicable to gambling activity should be a reflection of predefined regulatory models Liberalised market little concern with the potential social harm of the activity no reasonable justification for the imposition of different forms of taxation Even if the legislator for some reason deems necessary to create a specific tax applicable to a given activity, within the context of that tax, all entities providing the activity should be treated the same way

8 Stakes tax on sports betting: Violation of principle of neutrality?

9 Stakes tax on sports betting: Violation of principle of neutrality? The existing different treatment comes with a high potential to raise issues of a constitutional nature Is there a Constitutional admissible reason to justify the imposition of different tax models to land-based casinos and online casinos and, within these, depending on the type of game, and bet, offered to consumers? Tax revenue maximization is not per se an admissible ground Expected legal challenge on the grounds of breach of neutrality principle

10 Q & A Any questions? Thank you! António Moura Portugal a.portugal@abbc.pt

11 ABBC Advogados Sociedade de Advogados RL Largo S. Carlos, N.º Lisboa - Portugal Tel: Fax: