The European Union Court of Justice (CJEU), Europe's highest court in matters of EU law, ruled against the Italian government in a dispute related to the Italian taxation on gambling.
According to the CJEU, Italy's tax legislation operates in conflict with Article 52 and Article 56 of the Treaty on the Functioning of the European Union, and also does not "ensure a coherent implementation of the objective of combating gambling addiction."
"Although direct taxation falls within the competence of the Member States, they must nonetheless exercise that competence consistently with EU law," the CJEU said.
The ruling of the Luxembourg-based court comes to solve a dispute between Italy’s tax board and two professional poker players, Team PokerStars Pro Pier Paolo Fabretti and Cristiano Blanco, who were requested to pay taxes on sums they won at events held outside of the Italian borders.
According to the acts deposited at the CJEU, the Italian tax board accused Blanco of "failing to file income tax returns for all tax periods in the years between 2007 and 2009, and of failing to declare the sum of €410,227 in 2007, the sum of €25,969 in 2008, and the sum of €46,028 in 2009 — those sums corresponding to winnings obtained from casinos located in other Member States and in third countries."
The same agency also asked Fabretti to pay €45,327.48 "on grounds that he had failed to declare the sum of €52,000 [from an Italian Poker Tour High Roller Event he won in Slovenia in 2009] which he had won playing poker in a casino situated in another Member State."
Strongly convinced to have acted in line with what was disposed by the European legislation, the two players rejected all the accusations and claimed that the action of the Italian tax board conflicted with the European treaties, as it would introduce a form of second taxation on sums that had already been subjected to taxes in another EU Member State.
"The Italian Government states that the winnings made in casinos located in Italy are exempt from income tax in order to avoid double taxation of the same sums upstream on the casino and downstream on the gambler," the CJEU explained in the ruling.
"By contrast, winnings from games of chance obtained in casinos established abroad are treated as income. That income must be included in the income tax return and therefore must be subject to income tax."
In this sense, the CJEU believes "the [Italian] national legislation, by restricting the benefit of a tax exemption only to winnings from games obtained in the Member State at issue, makes the provision of services constituted by the organization of gambling for remuneration subject to different tax arrangements depending on whether that service is carried out in that Member State or in other Member States."
"National legislation such as that at issue in the main proceedings," the CJEU continued, "gives rise to a discriminatory restriction on the freedom to provide services as guaranteed by Article 56 TFEU in relation to not only service providers but also the recipients of those services."
"We won," commented Blanco after he posted on his Facebook profile a picture of himself with a big smile right from the CJEU seat in Luxembourg.
"I am extremely happy. It’s the end of a nightmare for me," Blanco told Italy’s GiocoNews. "I have always been optimistic about this, but everything feels much better now that I have heard the ruling with my own ears. I want to thank the fantastic team of lawyers and fiscal experts who helped us to take home this historical result."
Blanco also added that the experience in Luxembourg reminded him of his second place at the European Poker Tour in Dortmund (2007), as only that time he felt "a kind of happiness comparable the one I feel today."