Keywords

Summary



Keywords

Freedom to provide services – Restrictions – Fiscal legislation

(Arts 46(1) EC and 49 EC; EEA Agreement, Art. 36)

Summary

By maintaining in force fiscal legislation which exempts winnings from lotteries, games of chance and betting organised in a Member State by certain public bodies and entities established in that Member State and pursuing social or charitable non-profit-making activities, without that same exemption being granted to winnings from lotteries, games of chance and betting organised by bodies and entities established in another Member State of the European Union or European Economic Area and pursuing the same type of activities, that Member State fails to fulfil its obligations under Article 49 EC and Article 36 of the Agreement on the European Economic Area (EEA).

Public bodies and entities pursuing social or charitable non-profit-making activities established in Member States other than the Member State concerned and having the same objectives as those of the bodies and entities of that Member State are in a situation comparable to that of the latter.

In those circumstances, since it has the effect of treating winnings distributed by the bodies and entities established in that Member State more favourably, such a fiscal exemption constitutes a discriminatory restriction on freedom to provide services, to the detriment of public bodies and entities pursuing social or charitable non-profit-making activities established in another Member State and having the same objectives as the bodies and entities of the first Member State.

In so far as it is discriminatory, that restriction can be justified only provided that the objectives pursued by the national legislature fall within the category of public policy, public security or public health grounds for the purposes of Article 46(1) EC and that it is in conformity with the principle of proportionality.

In that regard, it is not justified by an objective of preventing money laundering and combating tax evasion, for the authorities of a Member State cannot reasonably assume, in a general way and without distinction, that bodies and entities established in another Member State engage in criminal activity. Furthermore, to exclude in a general way such bodies and entities from the benefit of a tax exemption appears to be disproportionate, for it goes beyond what is necessary to combat crime. With regard to combating addiction to gambling, although it cannot be excluded that that objective could be regarded as falling within the definition of protection of public health, the exemption of winnings is, however, likely to encourage consumers to participate in the lotteries, games of chance and betting able to benefit from such exemption and is therefore not a suitable and coherent means of ensuring the attainment of the objective supposedly pursued. With regard to financing infrastructure and projects for socially useful purposes by way of organisations covered by the exemption, it concerns economic grounds which are also not included among the grounds in Article 46 EC which could justify a restriction of the freedom to provide services guaranteed by the Treaty. The same is true of the protection of the social order and of consumers, which constitute overriding reasons relating to the public interest and cannot therefore justify restrictions which are discriminatory.

It follows that that discrimination is not justified for the purposes of Article 46(1) EC.

In so far as the provisions of Article 36 of the EEA Agreement have the same legal scope as the substantially identical provisions of Article 49 EC, the above considerations can be applied mutatis mutandis to that article.

(see paras 33-34, 38-41, 43, 45,47-49, operative part)