Supreme Court once again refers gaming tax case


Supreme Court once again refers gaming tax case

The Court of Appeal in The Hague ruled that an interested party had been excessively burdened by the levy of gaming tax on the selling of gaming machines as from July 1, 2008. The Supreme Court deems this judgment to have been insufficiently substantiated, though.

22 march 2017

Dutch version

Gaming tax

The selling of gaming machines had been subject to VAT up to July 1, 2008. The difference between the bets made and the prices paid were considered to be sales inclusive of VAT. This changed on July 1, 2008. As from this date, the gross revenues of gaming machines are taxed with 29% gaming tax. This has led to a substantial increase of the tax burden for gaming machines operators.

First appeal

The interested party’s position is that the amendment of the law as referred to above infringes on the peaceful enjoyment of possessions as safeguarded in article 1 of the First Protocol to the European Convention on Human Rights (ECHR). On the back of this, the Supreme Court ruled in June 2014 that by levying gaming tax on gaming machines operators, the legislature pursued a legitimate objective in the public interest. It had not overreached the discretion it has been assigned. But while the Supreme Court ruled that the statutory regulations do not infringe on the right to peaceful enjoyment of possessions, the argument was far from settled. The fair balance between the public interest and taxpayers’ individual rights should be observed, too.

The Supreme Court therefore referred the case to the Court of Appeal in The Hague, to examine whether the levy had led to an excessive burden for the interested party. In July 2015, this Court of Appeal ruled that the interested party had shown, through the figures it had produced, that the regime change had caused it to get into a structural loss-making position. This was not affected by the position’s further deterioration due to changes in consumer behavior, the economic recession, and the introduction of the smoking ban. All things considered the Court of Appeal took the position that the fair balance between the public interest and protecting the interested party’s individual rights had been lost and it awarded substantial damages.

Second appeal

The Supreme Court was once again presented with the case recently. The core question was whether the Court of Appeal in The Hague had properly tested whether the fair balance had been breached. The Supreme Court consideration is that an individual and excessive burden solely arises if it is felt to be stronger than in general. The only way this can arise with the interested party is when such conclusion is based on specific facts and circumstances (not applying to all gaming machines operators). The Court of Appeal in The Hague had failed to perform this test (or had failed to do so properly). What’s more, the Court of Appeal had erroneously based itself on the consolidated annual accounts. These proceedings solely dealt with the damage the interested party itself had suffered by the introduction of the gaming tax regime. The case has been referred once again, this time to the Arnhem-Leeuwarden Court of Appeal.

Source: HR 17 March 2017, 15/04187 and 15/04164, ECLI:NL:HR:2017:441 and 442

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