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OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 25 April 2024 (1)

Case C-741/22

Casino de Spa SA and Others

v

État belge (SPF Finances),

Interested parties:

État belge (SPF Justice),

La Chambre des Représentants

(Request for a preliminary ruling from the tribunal de première instance de Liège (Court of First Instance, Liège, Belgium))

(Reference for a preliminary ruling – Tax law – Value added tax – Directive 2006/112/EC – Article 135(1)(i) – Exemption of gambling – Direct effect of the exemption – Differentiation between online gambling and analogue gambling – Differentiation between various kinds of online gambling (lotteries and other forms of online gambling) – Inadmissibility of questions referred for a preliminary ruling – Temporary maintenance in force of national law without prior reference for a preliminary ruling – VAT exemption as aid)






I.      Introduction

‘In gambling the many must lose in order that the few may win.’ (George Bernard Shaw, Anglo-Irish playwright and politician, 1856 to 1950).

1.        Although these and other dangers of gambling are generally recognised, Article 135(1)(i) of Directive 2006/112/EC on the common system of value added tax (‘the VAT Directive’) (2) has always exempted betting, lotteries and other forms of gambling. At first sight, the European Union appears to seek to promote gambling in terms of VAT. However, that exemption only applies ‘subject to the conditions and limitations laid down by each Member State’.

2.        Belgium has opted no longer to exempt online gambling (except online lotteries) from VAT since 1 July 2016. Other forms of gambling (including lotteries), however, remain exempt from VAT. Online gambling providers in Belgium consider this selective exemption in this case and that of Chaudfontaine Loisirs SA (C-73/23) (3) to be an infringement of the principle of neutrality. Here, it is also argued that the exemption of other gambling providers constitutes an unlawful State aid. In the end, a VAT exemption for online gambling is to be derived directly from EU law. This can only be successful in so far as the VAT Directive has direct effect in that respect, that is to say if that exemption already derives from it.

3.        Although the Court has dealt with the different taxation of various types of gambling in VAT law on several occasions in the past, (4) recent case-law gives cause to consider in depth the direct effect of Article 135(1)(i) of the VAT Directive in such a situation (selective exemption of individual types of gambling). At the same time, the Court has the opportunity to clarify whether and to what extent the principle of neutrality precludes a selective exemption of individual types of gambling.

II.    Legal framework

A.      European Union law

4.        Article 107(1) of the Treaty on the Functioning of the European Union (‘TFEU’) contains a prohibition on aid:

‘1.      Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.’

5.        Article 135(1)(i) of the VAT Directive governs the exemption of gambling from tax and is worded as follows:

‘1.      Member States shall exempt the following transactions:

 …

(i)      betting, lotteries and other forms of gambling, subject to the conditions and limitations laid down by each Member State.’

B.      Belgian law

6.        Article 8 of the loi spéciale sur la Cour constitutionnelle du 6 janvier 1989 (Special Law on the Constitutional Court of 6 January 1989) stipulates:

‘If the action is well founded, the Constitutional Court shall entirely or partially annul the statute, decree or rule referred to in Article 134 of the Constitution against which the action was instituted. …

Where the Court so deems necessary, it shall, by way of a general provision, specify which effects of the annulled provisions are to be considered permanent or provisionally maintained for the period determined by the Court.’

7.        Article 9 of the special law provides:

‘§ 1.      Annulment judgments delivered by the Constitutional Court shall have the force of res judicata as from their publication in the Moniteur Belge.

§ 2.      The judgments delivered by the Constitutional Court whereby actions for annulment are dismissed shall be binding on the courts with respect to the points of law settled by those judgments.’

8.        Article 44(3)(13) of the code de la taxe sur la valeur ajoutée (Value Added Tax Code) (as in force from 1 July 2016 to 21 May 2018) states:

‘The following shall also be exempt from the tax: …

13.

(a)      lotteries;

(b)      other forms of gambling, with the exception of those provided electronically as referred to in Article 18(1)(2)(16); …’

III. Facts and preliminary ruling procedure

9.        Twenty-seven companies governed by Belgian law, including Casino de Spa SA, which together constitute the ‘VAT unit’ GAMING ARDENT (‘the applicant’), and which are thus regarded as a single taxable person for VAT purposes, operate online games.

10.      Originally, transactions relating to gambling were exempt from VAT in Belgium. Articles 29 to 34 of the Programme Law of 1 July 2016 annulled that exemption. As a result, those transactions became taxable, while ‘conventional’ types of gambling and all lotteries (online and analogue) remained exempt from tax.

11.      However, the Cour constitutionnelle (Constitutional Court, Belgium) annulled the provisions in question of the Programme Law of 1 July 2016 by decision of 22 May 2018 on the grounds that it infringes the rules on the division of powers between the Federal State and the Regions (Article 177 of the Belgian Constitution). It stated that the taxes already paid for the period from 1 July 2016 to 21 May 2018 would nevertheless be maintained in view of the budgetary and administrative difficulties which would arise from their reimbursement.

12.      The applicant nevertheless applied for reimbursement of an amount of EUR 15 581 402.06, which it had paid as VAT on online games carried out from 1 July 2016 to 21 May 2018, after deducting the corresponding input VAT.

13.      In a report of 5 December 2019, the administration rejected that application on the ground that the conditions for reimbursement were not met. The applicant then brought an action before the referring court.

14.      The applicant considers that maintaining the effects of the annulled law is contrary to the principle of VAT neutrality, in that other forms of gambling are exempt, as well as contrary to other rules of EU law, including the prohibition of State aid. In the alternative, it claims that the Belgian State is liable on account of a fault on the part of the Cour constitutionnelle (Constitutional Court) in that temporarily maintaining the effects of the annulled provisions infringes Article 1 of the First Additional Protocol to the European Convention for the Protection of Human Rights and Fundamental Freedoms guaranteeing the protection of property. The defendant Belgian State, by contrast, considers that the claim is unfounded and that it cannot be ordered to refund the VAT.

15.      The tribunal de première instance de Liège (Court of First Instance, Liège, Belgium) seised of the action stayed the proceedings and referred the following six questions to the Court of Justice for a preliminary ruling under Article 267 TFEU:

‘(1)      Must Article 135(1)(i) of [the VAT Directive] be interpreted as precluding a Member State from using different treatment for online lotteries offered by Loterie Nationale [(the Belgian national lottery)], a public establishment, which are exempt from value added tax, and other online games of chance offered by private operators, which are subject to value added tax, assuming that they are similar supplies?

(2)      In answering the previous question, in order to determine whether there are two similar categories which are in competition with each other and which require the same treatment for the purposes of value added tax, or whether there are separate categories which allow for different treatment, must the national court consider only whether or not the two forms of games are in competition with each other from the point of view of the average consumer, in the sense that services are similar where they have similar characteristics and meet the same needs from the point of view of consumers, the test being whether their use is comparable, and where the differences between them do not have a significant influence on the decision of the average consumer to use one or the other of those services (alternative criterion), or must it take into account other criteria such as the existence of a discretionary power on the part of the Member State to exempt certain categories of games from VAT and to subject others to it, the fact that lotteries belong to a distinct category of games, referred to in Article 135(1)(i) of [the VAT Directive], the different legal frameworks which apply to Loterie Nationale and to other games of chance, the different supervisory authorities or the societal and gambler protection objectives pursued by the legislation applicable to Loterie Nationale?

(3)      Must the principle of sincere cooperation set out in Article 4(3) TEU, read in conjunction with Article 267 TFEU, the provisions of [the VAT Directive] and, where applicable, the principle of effectiveness, be interpreted as meaning that they allow the constitutional court of a Member State to maintain – on its own initiative and without a reference for a preliminary ruling under Article 267 TFEU – on the basis of a provision of national law – in this case Article 8 of the loi spéciale du 6 janvier 1989 sur la Cour constitutionnelle (Special Law of 6 January 1989 on the Constitutional Court) – the retrospective effect of national provisions on value added tax which were found to be contrary to the national Constitution and were annulled on that ground and whose non-conformity with EU law was also relied on in support of the action for annulment before the national court, without, however, that complaint having been examined by the latter, on the general ground of “budgetary and administrative difficulties which reimbursement of taxes already paid would cause”, thus completely depriving taxable persons subject to VAT of the right to reimbursement of the VAT collected in breach of EU law?

(4)      If the answer to the preceding question is in the negative, do the same provisions and principles, interpreted, in particular, in the light of the judgment of 10 April 2008, Marks & Spencer [(C-309/06, EU:C:2008:211)] under which the general principles of Community law, including that of fiscal neutrality, give a trader who has made supplies a right to recover the sums mistakenly claimed in respect of them (judgment of 10 April 2008, Marks & Spencer, C-309/06[, EU:C:2008:211)]), require the Member State concerned to reimburse to the taxable persons the VAT collected in breach of EU law where, as in the present case, it subsequently follows from a judgment of the Court of Justice, in response to questions referred for a preliminary ruling, that the annulled national provisions are not in conformity with [the VAT Directive] and that the decision of the constitutional court to maintain the retrospective effect of the provisions annulled by it is not in conformity with EU law?

(5)      Does the different treatment introduced by Articles 29, 30, 31, 32, 33 and 34 of the loi-programme du 1er juillet 2016 (Programme Law of 1 July 2016), which were annulled by Constitutional Court judgment No 34/2018 of 22 March 2018, but the effects of which were maintained after that date in respect of the taxes already paid for the period from 1 July 2016 to 21 May 201[8], between lotteries, whether terrestrial or online, and other online games and forms of betting create a selective advantage in favour of the operators of those lotteries and thus aid granted by the Belgian State or through Belgian State resources which distorts or threatens to distort competition by favouring certain undertakings, which is incompatible with the internal market within the meaning of Article 107 TFEU?

(6)      If the answer to the preceding question is in the affirmative, does the obligation on the Member States to safeguard the rights of individuals affected by the unlawful implementation of the aid in question, in accordance with, inter alia, the judgment of 5 October 2006, Transalpine Ölleitung in Österreich [(C-368/04, EU:C:2006:644)] the principle of sincere cooperation and the general principles of Community law, including that of fiscal neutrality, which give a trader who has made supplies a right to recover the sums mistakenly charged in respect of them (judgment of 10 April 2008, Marks & Spencer (C-309/06[, EU:C:2008:211]), allow taxable persons who have been charged VAT on the basis of unlawful State aid to recover the equivalent of the tax paid in the form of damages for the loss suffered?’

16.      The applicant, the Kingdom of Belgium, the Federal Republic of Germany, the Czech Republic and the European Commission submitted written observations in the proceedings before the Court. In accordance with Article 76(2) of the Rules of Procedure of the Court of Justice, the Court did not consider it necessary to hold a hearing.

IV.    Legal assessment

17.      The six questions can essentially be broken down into three sets.

18.      Since the applicant in the main proceedings is challenging the levying of VAT on its services under national law, Questions 1 and 2 relate to whether those services are exempt from VAT under Article 135(1)(i) of the VAT Directive and the applicant is to be reimbursed the tax paid in breach of EU law despite the maintenance in force of national law to the contrary. This requires that an exemption for online gambling arises directly from the VAT Directive on which the applicant can rely (B).

19.      Questions 3 and 4, on the other hand, relate to whether the Belgian Constitutional Court could nevertheless order the continued application of national law without a prior reference for a preliminary ruling due to a possible infringement of EU law, which is why the tax arose under national law after all, and whether this precludes a claim for repayment of the tax possibly paid in breach of EU law. This already raises the question of the admissibility of these two questions referred (A).

20.      Questions 5 and 6, by contrast, concern whether different VAT treatment of lotteries (exempt) and other online games and online betting (taxed) also constitutes prohibited State aid (C).

A.      Admissibility of Questions 3 and 4

21.      Questions 3 and 4 are admissible in preliminary ruling proceedings only if the answer to them is necessary and relevant in order to give judgment in the main proceedings.

22.      In principle, it is solely for the national court before which the dispute has been brought to determine both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Questions concerning the interpretation of a rule of EU law enjoy a presumption of relevance. (5) The Court may refuse to rule on a question only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it. (6)

23.      Even on the basis of the abovementioned presumption, Questions 3 and 4 are inadmissible in this case. The main proceedings concern the reimbursement of a tax which may have been paid in breach of EU law (or more precisely, in breach of the directive). The national statute was, although it had to be annulled for reasons of national law, also declared by the competent national court to be maintained in force for a certain period of time on reasons of national law (the order that it be temporarily maintained in force).

24.      National law thus requires taxation that may infringe the VAT Directive. Whether the applicant remains obliged to pay the VAT already paid for the period from 1 July 2016 to 21 May 2018 therefore results solely from the interpretation of the VAT Directive and thus from the answer to Questions 1 and 2. The remaining content of Questions 3 and 4 is thus reduced to the question whether the Cour constitutionnelle (Constitutional Court) could or even should have referred the matter to the Court of Justice before ordering that the national tax be maintained and whether, if that obligation is affirmed, a claim for refund follows therefrom. However, a potential obligation on the Cour constitutionnelle (Constitutional Court) to make a reference is irrelevant to the existence or otherwise of a payment obligation on the part of the applicant.

25.      Furthermore, it is not clear why an infringement of Article 267 TFEU by one court, namely the Constitutional Court, should have a bearing on the decision of another court, which referred the decisive questions of EU law to the Court of Justice for a preliminary ruling. The dissatisfaction with the conduct of the Belgian Constitutional Court in not making a reference for a preliminary ruling and the interpretation of Article 267 TFEU that is sought consequently bears no relation to the dispute in the main proceedings. Questions 3 and 4 are therefore inadmissible.

26.      Lastly, the referring court does not inform the Court of Justice of what the Cour constitutionnelle (Constitutional Court) can and may actually examine. If its national power of review is limited, for example, to compliance with the national rules on competence, a reference for a preliminary ruling can hardly be considered. Therefore, the Court of Justice does not have the necessary information to be able to examine an infringement of Article 267 TFEU. For this reason too, Questions 3 and 4 are inadmissible.

B.      The exemption of online gambling pursuant to the VAT Directive (Questions 1 and 2)

27.      In the main proceedings, the applicant objects to the taxation of its online gambling services under national law (maintained in force). This appears to be unambiguous and cannot be interpreted in conformity with EU law. Therefore, the interpretation of Article 135(1)(i) of the VAT Directive is only relevant if that article has direct effect (1). Essentially, the applicant takes the view that its services should be treated in precisely the same way as other exempt gambling services. That could possibly also result from the principle of neutrality of VAT (2).

1.      Direct effect of the exemption?

28.      According to settled case-law, whenever the provisions of a directive appear, so far as their subject matter is concerned, to be unconditional and sufficiently precise, they may be relied upon before the national courts by individuals against the Member State where the Member State has failed to implement the directive in domestic law within the period prescribed or where it has failed to implement the directive correctly. (7)

29.      A provision of EU law is unconditional where it sets forth an obligation which is not qualified by any condition, or subject, in its implementation or effects, to the taking of any measure either by the institutions of the European Union or by the Member States. (8) On the other hand, a provision is conditional if it involves the application of national provisions determining the actual scope of the conditions under which EU law is applicable. (9) It is sufficiently precise where it sets out an obligation in unequivocal terms. (10)

30.      In the light of this settled case-law, Article 135(1)(i) of the VAT Directive is neither unconditional nor sufficiently precise. It provides that gambling is to be exempted ‘subject to the conditions and limitations laid down by each Member State’. It does not make clear which forms of gambling specifically are to be exempted and therefore an obligation is not imposed on the Member State in unequivocal terms. On the contrary, it follows from the wording that only certain forms of gambling (chosen by the Member States) can be exempted.

31.      Nor is that obligation unconditional because, according to the clear wording of Article 135(1)(i) of the VAT Directive, it is qualified by ‘the conditions and limitations laid down by each Member State’. Consequently, the exemption of gambling requires, in its implementation or effects, the taking of a measure by the Member States.

32.      It is probably for that reason that the Court (11) expressly ruled in 2010 that ‘Article 135(1)(i) of [the VAT Directive] must be interpreted as meaning that the exercise of the discretionary power of the Member States to fix conditions and limitations on the exemption from value added tax provided for by that provision allows those States to exempt from that tax only certain forms of gambling’. It subsequently confirmed that interpretation on two occasions. (12)

33.      However, if – following the Court’s interpretation – Article 135(1)(i) of the VAT Directive allows Member States to exempt only certain forms of gambling, the same applies in this case as the Court of Justice has ruled on other tax exemptions. In so far as the Member States only had to exempt certain services (as in Article 132(1)(n) and (m) of the VAT Directive), those provisions have no direct effect. (13)

34.      The expression ‘certain forms of gambling’ in the Court’s decision (14) indicates that that provision does not impose an obligation on Member States to make a general exemption for ‘all’ services that constitute gambling. (15) To interpret Article 135(1)(i) of the VAT Directive as meaning that, notwithstanding the use of the word ‘certain’, Member States are obliged to exempt ‘all’ forms of gambling would be liable to extend the material scope of the exemption. That would also be contrary to the Court’s case-law stating that the exemptions in the VAT directive are to be interpreted strictly. (16)

35.      The very fact that Article 135(1)(i) of the VAT Directive allows Member States to exempt only ‘certain’ (17) forms of gambling militates against the direct effect of Article 135(1)(i) of the VAT Directive. (18)

36.      The only (earlier) decision of the Court of Justice which, by contrast, attributed direct effect to the predecessor provision in Article 13(B)(f) of the Sixth [Council] Directive 77/388 [of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 77 L 145, p. 1)] in order to prevent the application of rules of national law which are incompatible with that provision, (19) has, in my view, been superseded by the more recent case-law on the direct effect of VAT exemptions (20) and VAT options (21) and by the decision of the Court of Justice from 2010. (22)

37.      This is also convincing in terms of substance. That is because the exemption of gambling in Article 135(1)(i) of the VAT Directive is not linked to any particular evaluation under EU law. According to the Court, that exemption is merely based on practical considerations, in that gambling transactions do not lend themselves easily to the application of VAT. Unlike in the case of certain public interest services supplied in the social sector, there is no desire here to afford those activities more advantageous VAT treatment. (23) It is more likely that that exemption reflects a compromise between the then six Member States, some of which already had special gambling laws and therefore taxed individual forms of gambling. By the exemption subject to the conditions and limitations of the Member States, they were able to retain their gambling laws and avoid double levying of VAT.

38.      In any case, it is not possible to see any reason why such an exemption should have direct effect for purely technical reasons (impractical levying or avoidance of double taxation) under the conditions and within the limitations of the individual Member States. There is therefore no need for a particularly extensive assumption of a direct effect of that exemption. The fact therefore remains that the exemption has no direct effect.

39.      However, if the applicant cannot in any event rely directly on the exemption laid down in Article 135(1)(i) of the VAT Directive in this case, there is no need to answer Questions 1 and 2. It is then for the Commission to bring infringement proceedings against Belgium if it believes that the taxation of the applicant (and other online gambling operators) infringes the VAT Directive. However, no such concerns are evident from the Commission’s observations.

2.      Infringement of the principle of neutrality?

40.      The principle of fiscal neutrality is of no assistance to the applicant in this regard either. A Member State must also comply with the principle of fiscal neutrality when exercising its options or discretion. (24) First, this cannot lead to the direct effect of an insufficiently precise or conditionally worded provision of a directive. Secondly, that principle ‘merely’ precludes that similar goods or services which are in competition with each other are treated differently for VAT purposes. (25)

41.      Goods or services are similar where they have similar characteristics and meet the same needs from the point of view of consumers, the test being whether their use is comparable. In addition, the differences between them must not have a significant influence on the decision of the average consumer to use one or the other of those goods, (26) and those supplies can therefore, from the point of view of the average consumer, be exchanged one for the other. (27) The assessment as to whether goods or services are similar from the point of view of a consumer entails by definition a degree of discretion.

42.      In connection with the adoption of tax measures, the Court recognises that the EU legislator is called upon to make political, economic and social choices, and to rank divergent interests or to undertake complex assessments. As a result, it must be granted broad discretion, so that judicial review must be limited to manifest errors. (28) In particular, the Court cannot substitute its own assessment for that of the EU legislator. (29)

43.      In the light of the Court’s most recent case-law, the same applies in relation to the review of the discretion of national legislators. The Court thus increasingly points out the fact that the European Union is composed of States which respect and share the values referred to in Article 2 TEU. (30) The values referred to in Article 2 TEU, on which the European Union is founded, include in particular the principle of democracy. According to that principle, it is the democratically legitimised legislator that is primarily responsible for discharging the discretion to make legislative decisions.

44.      Consequently, where EU law grants such discretion to a Member State, it is the elected parliament of that Member State that is responsible for exercising it. The powers of other bodies to review that parliamentary decision-making discretion are therefore, by definition, limited. They cannot substitute their own view as to the similarity of goods or services for that of the body democratically legitimised to form it. This applies to national courts just as much as to the courts of the European Union.

45.      On that basis, both the Court of Justice and a court of a Member State such as the referring court may, as a general rule, find the principle of neutrality to have been infringed by the democratically legitimised legislator only if it has clearly exceeded its decision-making discretion.

46.      This is the case, however, only if, from the point of view of the average consumer, the goods or services taxed at different rates are all but identical and could therefore readily be substituted for each other, (31) as the Commission also submits. It is only then that there is a distortion of competition between the providers of those goods or services which is no longer compatible with the principle of neutrality.

47.      For that reason, the Court has thus far been generally reluctant to find an infringement of the principle of neutrality, where, for example the Member States apply a reduced rate of tax, or an exemption from tax, only to fresh pastry goods and cakes (but not to those which exceed a certain best-before date (32)), only to mobile fairground entertainers (but not to stationary amusement parks(33)), not to all medicinal products (but only to certain ones, depending, inter alia, on how they are used (34)), only to taxis (but not to all forms of passenger transport by car (35)), or only to printed books (but not to books on other physical media (36)).

48.      In the light of this limited power of review of the courts, there is no manifest exceeding of decision-making discretion in this case. The differently taxed services (online gambling or non-lottery online gambling, on the one hand, and ‘analogue’ gambling or online lotteries, on the other) differ – contrary to the view taken by the applicant – from the point of view of an average consumer in several respects.

49.      For example, online gambling differs from ‘analogue’ gambling in terms of location (anytime and anywhere versus specific locations); the effort required to start such gambling (no effort, as possible anytime and anywhere via smartphone, versus physical movement to a specific location required); the lack of ‘social control’ of gambling in private which is possible at any time; the potential for addiction or the danger of gambling that is available and easily accessible at any time, and also the way in which the gambling is carried out (click on the computer versus physical action on a slot machine or even interaction with a person (for example, a croupier) on site). A visit to an ‘analogue’ casino can be described more as an ‘event’, whilst a ‘visit’ to a website (‘online casino’) can be described more as ‘gambling on the internet’.

50.      Having regard solely to the content of the service (in this case the satisfaction of a gaming need) is therefore of no assistance. Instead, the external factual and legal context must also be included in the point of view of an average consumer. (37) The same applies in relation to any objectives that a parliamentary body may be pursuing by differentiation. The principle of neutrality of VAT does not prohibit objectively justified differentiations.

51.      The fact that the medium (online versus ‘analogue’) is a significant criterion for differentiation from the point of view of the EU legislator is, moreover, demonstrated by the provisions of the VAT Directive, some of which also differentiate according to whether a service is provided electronically (see, inter alia, the place of taxation (special provision in Article 58 of the VAT Directive) or the tax rate (Article 98(3) of the VAT Directive excludes certain reduced tax rates for services which are provided electronically)). All of this would be unnecessary if electronic and ‘analogue’ transactions were readily interchangeable.

52.      Consequently, for there to be an infringement of the principle of neutrality it is not sufficient for different types of gambling to satisfy a comparable gambling need (or a comparable gambling addiction). Nor is it sufficient that one or the other consumer may switch from one type of gambling to another, so that a certain degree of competition between the different providers cannot be ruled out. The decisive factor is rather whether the legislator considers that the two services can, from the point of view of the average consumer, (obviously) be exchanged one for the other.

53.      As a result of the circumstances of the use of the services and the associated different risks of gambling, ‘online’ and ‘analogue’ gambling can therefore also be taxed differently – as the Commission and Belgium submit.

54.      Nor can the distinction in Belgium between online lotteries and other forms of online gambling be called into question. Lotteries are a special type of gambling that is usually organised according to a specific programme in return for a fixed stake with the prospect of winning certain cash or non-cash prizes. The outcome is based on chance and is usually announced publicly. In that type of gambling – as the Commission rightly points out – the activity is limited to the purchase of a lottery ticket and in that respect differs from other forms of online gambling which are based on repeated activities of the player, who immediately learns of his or her good fortune (or more often bad fortune) and reacts spontaneously. As Belgium submits, the gaming element is missing in that case. There are also differences in the minimum and maximum permitted stakes, prizes and the chances of winning. (38)

55.      Furthermore, the histories of lotteries and certain (historical) tax laws of the Member States show a traditional separation between lotteries and other kinds of gambling. (39) This indicates that for an average consumer, a lottery has probably always been something different from gambling in a casino or on a slot machine. It can therefore hardly be claimed that online lotteries and other forms of online gambling can, from the point of view of the average consumer, be exchanged one for the other. An infringement of the principle of neutrality is also not apparent in this regard.

3.      Interim conclusion

56.      Article 135(1)(i) of the VAT Directive has no direct effect. Even if Article 135(1)(i) of the VAT Directive did have direct effect, Belgium’s differentiation between gambling which is provided electronically and gambling which is not provided electronically would not constitute an infringement of the principle of neutrality of VAT. The same applies in relation to the differentiation between gambling which is provided electronically and lotteries which are carried out electronically. In the absence of an infringement of EU law, EU law therefore does not require that the VAT owed under national law must be reimbursed to the applicant.

C.      Prohibited aid on account of different VAT treatment (Questions 5 and 6)

57.      In so far as the referring court asks as to the existence of aid, those questions are also inadmissible. According to settled case-law of the Court, those liable to pay a tax cannot rely on the argument that the exemption enjoyed by other businesses constitutes State aid in order to avoid payment of that tax. (40)

58.      Only if the tax is used to favour other businesses is it necessary to examine whether the revenue from the tax is used in a manner compatible with the rules on State aid. (41) That is not the situation here, however. In the present case, the burden is imposed on the applicant in the main proceedings by a general tax (VAT), which is paid into the general public budget and does not therefore specifically favour any third party. Accordingly, in the present case the applicant is challenging only a tax notice addressed to it, which it considers to be unlawful because other taxable persons are not taxed to the same extent. This cannot succeed under the rules on State aid.

59.      In principle, unlawfully granted aid must be recovered. (42) However, not taxing the applicant would not amount to recovery, but would merely extend the State aid to the applicant in this case and thus not eliminate the distortion of competition, but intensify it. Therefore, in proceedings relating solely to a business’ own tax liability the question of State aid to a third party is not relevant to the decision and is not therefore admissible, as the Court has already ruled on several occasions. (43)

60.      Furthermore, no prohibited aid within the meaning of Article 107(1) TFEU is evident from a substantive point of view. According to the settled case-law of the Court, for that to be the case there must be a State measure which confers a selective advantage on the beneficiary. (44)

61.      If, as stated above, Article 135(1)(i) of the VAT Directive must be interpreted as meaning that the exercise of the power of the Member States to fix conditions and limitations on the VAT exemption provided for by that provision allows those States to exempt from VAT only certain forms of gambling, then that (selective) exemption is already laid down in EU law. However, correct implementation of EU law (see, in this respect, point 40 et seq. above) can hardly be regarded as a State measure by Belgium under the rules on State aid. Rather, it is a matter of EU law.

62.      Moreover, there is also no advantage of an undertaking, as Germany rightly points out. In VAT law, exemptions only benefit the recipient of the supplies because it is settled case-law of the Court that VAT is an indirect tax on consumption which is to be borne by the final consumer. (45) In that regard, the taxable undertaking acts only as ‘tax collectors for the State and in the interest of the public exchequer’. (46) From a material point of view, VAT is therefore intended to tax not the taxable undertaking but the financial capacity of consumers as reflected in their expenditure of assets to obtain a consumable benefit. (47) However, if the liability to VAT of a service is intended to burden the consumer and not the provider, then a VAT exemption should only exempt the consumer and not the provider. The VAT exemption for gambling services is therefore an advantage of the consumer and not the provider.

63.      Furthermore, there is a selective advantage only if a national measure is such as to favour ‘certain undertakings or the production of certain goods’ over others, which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation and which are accordingly subject to different treatment that can, in essence, be classified as ‘discriminatory’. (48)

64.      That requires a derogation from ‘normal taxation’, which is not justified. Both are lacking here. According to Article 135(1)(i) of the VAT Directive, normal taxation is the exemption of gambling, which is precisely the case here as regards ‘analogue’ gambling and all lotteries. Furthermore, the differentiation under VAT law between online gambling and other forms of gambling and also between online lotteries and online gambling is – as stated above (point 40 et seq.) – objectively justified and therefore not discriminatory. The rules on State aid also do not prohibit objectively justified differentiations in a general law. Consequently, the element of selectivity is also lacking.

V.      Conclusion

65.      I therefore propose that the questions referred by the tribunal de première instance de Liège (Court of First Instance, Liège, Belgium) be answered as follows:

(1)      Article 135(1)(i) of the VAT Directive has no direct effect. It is neither unconditional nor sufficiently precise.

(2)      The principle of neutrality of VAT does not preclude a differentiation between gambling which is provided electronically and gambling which is not provided electronically. Instead, there are objective reasons for this and for the differentiation between gambling which is provided electronically and lotteries which are organised electronically.

(3)      In proceedings relating solely to a business’ own tax liability the question of State aid to a third party is inadmissible. In principle, those liable to pay a tax cannot rely on the argument that the exemption enjoyed by other businesses constitutes State aid in order to avoid payment of that tax.

1      Original language: German.

2      Council Directive of 28 November 2006 (OJ 2006 L 347, p. 1) in the versions applicable to the years in dispute (2016 to 2018).

3      See, in that respect, my Opinion of the same date.

4      See, in particular: judgments of 24 October 2013, Metropol Spielstätten (C-440/12, EU:C:2013:687); of 14 July 2011, Henfling and Others (C-464/10, EU:C:2011:489); of 10 November 2011, Rank Group (C-259/10 and C-260/10, EU:C:2011:719); of 10 June 2010, Leo-Libera (C-58/09, EU:C:2010:333); of 13 July 2006, United Utilities (C-89/05, EU:C:2006:469); of 17 February 2005, Linneweber and Akritidis (C-453/02 and C-462/02, EU:C:2005:92); and of 11 June 1998, Fischer (C-283/95, EU:C:1998:276).

5      See judgments of 6 October 2021, Sumal (C-882/19, EU:C:2021:800, paragraphs 27 and 28), and of 9 July 2020, Santen (C-673/18, EU:C:2020:531, paragraphs 26 and 27 and the case-law cited).

6      See judgments of 6 October 2021, Sumal (C-882/19, EU:C:2021:800, paragraph 28), and of 9 July 2020, Santen (C-673/18, EU:C:2020:531, paragraph 27 and the case-law cited).

7      Judgments of 10 December 2020, Golfclub Schloss Igling (C-488/18, EU:C:2020:1013, paragraph 26), and of 15 February 2017, British Film Institute (C-592/15, EU:C:2017:117, paragraph 13 and the case-law cited).

8      Judgments of 10 December 2020, Golfclub Schloss Igling (C-488/18, EU:C:2020:1013, paragraph 27), and of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt (C-108/14 and C-109/14, EU:C:2015:496, paragraph 49 and the case-law cited).

9      See, expressly, judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt (C-108/14 and C-109/14, EU:C:2015:496, paragraph 50).

10      Judgments of 10 December 2020, Golfclub Schloss Igling (C-488/18, EU:C:2020:1013, paragraph 28), and of 1 July 2010, Gassmayr (C-194/08, EU:C:2010:386, paragraph 45 and the case-law cited).

11      Judgment of 10 June 2010, Leo-Libera (C-58/09, EU:C:2010:333, operative part).

12      Judgment of 24 October 2013, Metropol Spielstätten (C-440/12, EU:C:2013:687, paragraph 29), and, similarly, judgment of 10 November 2011, Rank Group (C-259/10 and C-260/10, EU:C:2011:719, paragraph 53).

13      Judgments of 10 December 2020, Golfclub Schloss Igling (C-488/18, EU:C:2020:1013), and of 15 February 2017, British Film Institute (C-592/15, EU:C:2017:117).

14      Judgment of 10 June 2010, Leo-Libera (C-58/09, EU:C:2010:333, operative part).

15      To that effect, judgment of 10 December 2020, Golfclub Schloss Igling (C-488/18, EU:C:2020:1013, paragraph 30).

16      To that effect, judgments of 10 December 2020, Golfclub Schloss Igling (C-488/18, EU:C:2020:1013, paragraph 34); of 15 February 2017, British Film Institute, C-592/15, EU:C:2017:117, paragraph 17 and the case-law cited); and of 21 March 2013, PFC Clinic (C-91/12, EU:C:2013:198, paragraph 23).

17      Judgment of 10 June 2010, Leo-Libera (C-58/09, EU:C:2010:333, operative part).

18      See, to that effect, judgments of 10 December 2020, Golfclub Schloss Igling (C-488/18, EU:C:2020:1013, paragraph 36), and of 15 February 2017, British Film Institute (C-592/15, EU:C:2017:117, paragraphs 14, 16, 23 and 24).

19      Judgment of 17 February 2005, Linneweber and Akritidis (C-453/02 and C-462/02, EU:C:2005:92, point 2 of the operative part). Along similar lines, although not in the operative part, judgment of 10 November 2011, Rank Group (C-259/10 and C-260/10, EU:C:2011:719, paragraphs 68 and 69), it being less about the taxable person relying on a provision of a directive and more about the Member State not relying on its national law to the contrary. Whether this is really a question of the primacy of EU law and covered by the case-law of the Court of Justice on the (exceptional) direct effect of directives in favour of the individual is, however, somewhat questionable.

20      Judgments of 10 December 2020, Golfclub Schloss Igling (C-488/18, EU:C:2020:1013, point 1 of the operative part), and of 15 February 2017, British Film Institute (C-592/15, EU:C:2017:117, operative part).

21      On the Member States’ option under Article 11 of the VAT Directive to regard several taxable persons as a single taxable person – judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt (C-108/14 and C-109/14, EU:C:2015:496, point 3 of the operative part).

22      Judgment of 10 June 2010, Leo-Libera (C-58/09, EU:C:2010:333, operative part), confirmed by judgments of 24 October 2013, Metropol Spielstätten (C-440/12, EU:C:2013:687, paragraph 29), and of 10 November 2011, Rank Group (C-259/10 and C-260/10, EU:C:2011:719, paragraph 53).

23      Judgments of 10 November 2011, Rank Group (C-259/10 and C-260/10, EU:C:2011:719, paragraph 39); of 14 July 2011, Henfling and Others (C-464/10, EU:C:2011:489, paragraph 29); of 10 June 2010, Leo-Libera (C-58/09, EU:C:2010:333, paragraph 24); and of 13 July 2006, United Utilities (C-89/05, EU:C:2006:469, paragraph 23).

24      Judgments of 9 September 2021, Phantasialand (C-406/20, EU:C:2021:720, paragraph 36); of 27 June 2019, Belgisch Syndicaat van Chiropraxie and Others (C-597/17, EU:C:2019:544, paragraph 46); and of 9 March 2017, Oxycure Belgium (C-573/15, EU:C:2017:189, paragraph 28).

25      Judgments of 19 December 2019, Segler-Vereinigung Cuxhaven (C-715/18, EU:C:2019:1138, paragraph 36); of 27 June 2019, Belgisch Syndicaat van Chiropraxie and Others (C-597/17, EU:C:2019:544, paragraph 47); of 9 March 2017, Oxycure Belgium (C-573/15, EU:C:2017:189, paragraph 30); of 10 November 2011, Rank Group (C-259/10 and C-260/10, EU:C:2011:719, paragraph 32); and of 6 May 2010 Commission v France (C-94/09, EU:C:2010:253, paragraph 40).

26      Judgments of 3 February 2022, Finanzamt A (C-515/20, EU:C:2022:73, paragraph 44); of 9 September 2021, Phantasialand (C-406/20, EU:C:2021:720, paragraph 38); of 27 June 2019, Belgisch Syndicaat van Chiropraxie and Others (C-597/17, EU:C:2019:544, paragraph 48); of 9 November 2017, AZ (C-499/16, EU:C:2017:846, paragraph 31); and of 27 February 2014, Pro Med Logistik and Pongratz (C-454/12 and C-455/12, EU:C:2014:111, paragraph 54).

27      See, expressly, judgment of 9 September 2021, Phantasialand (C-406/20, EU:C:2021:720, paragraph 39). The judgment of 9 November 2017, AZ (C-499/16, EU:C:2017:846, paragraph 33), speaks of ‘interchangeable’.

28      Judgment of 7 March 2017, RPO (C-390/15, EU:C:2017:174, paragraph 54). See also, to that effect, judgments of 10 December 2002, British American Tobacco (Investments) and Imperial Tobacco (C-491/01, EU:C:2002:741, paragraph 123), and of 17 October 2013, Billerud Karlsborg and Billerud Skärblacka (C-203/12, EU:C:2013:664, paragraph 35).

29      See further, expressly to this effect, judgment of 17 October 2013, Billerud Karlsborg and Billerud Skärblacka (C-203/12, EU:C:2013:664, paragraph 35).

30      Judgments of 24 June 2019, Commission v Poland (Independence of the Supreme Court) (C-619/18, EU:C:2019:531, paragraphs 42 and 43); of 10 December 2018, Wightman and Others (C-621/18, EU:C:2018:999, paragraph 63); and of 25 July 2018, Minister for Justice and Equality (Defects in the system of justice) (C-216/18 PPU, EU:C:2018:586, paragraph 35). On taking account of the principle of democracy when interpreting directives, see also judgment of 9 March 2010, Commission v Germany (C-518/07, EU:C:2010:125, paragraph 41).

31      Judgment of 9 September 2021, Phantasialand (C-406/20, EU:C:2021:720, paragraph 39: ‘In other words, it is necessary to determine whether the goods and services at issue are interchangeable from the point of view of an average consumer.’)

32      Judgment of 9 November 2017, AZ (C-499/16, EU:C:2017:846, paragraph 36).

33      Judgment of 9 September 2021, Phantasialand (C-406/20, EU:C:2021:720, paragraph 48).

34      Judgment of 27 June 2019, Belgisch Syndicaat van Chiropraxie and Others (C-597/17, EU:C:2019:544, paragraph 49).

35      Judgment of 27 February 2014, Pro Med Logistik and Pongratz (C-454/12 and C-455/12, EU:C:2014:111, paragraph 60).

36      Judgment of 11 September 2014, K (C-219/13, EU:C:2014:2207, paragraph 34).

37      Possibly different in this respect, judgment of 10 November 2011, Rank Group (C-259/10 and C-260/10, EU:C:2011:719, paragraph 47 et seq., but without giving more detailed reasons). However, that judgement did not concern the distinction between online and offline activities, which the Commission also rightly points out.

38      The Court has previously stated that they are relevant factors: judgment of 10 November 2011, Rank Group (C-259/10 and C-260/10, EU:C:2011:719, paragraphs 57 and 58).

39      For example in Germany, the Rennwett- und Lotteriegesetz (Law on Racing Bets and Lotteries), which contains special provisions on the taxation of public lotteries in Paragraph 26 et seq. In Austria, the Glücksspielgesetz (Law on Games of Chance) also contains special rules on lotteries in Paragraphs 6 to 12a. France likewise taxes lottery draws differently from horse-race betting or casinos.

40      Judgments of 3 March 2020, Vodafone Magyarország (C-75/18, EU:C:2020:139, paragraph 24); of 3 March 2020, Tesco-Global Áruházak (C-323/18, EU:C:2020:140, paragraph 36); of 6 October 2015, Finanzamt Linz (C-66/14, EU:C:2015:661, paragraph 21); and of 15 June 2006, Air Liquide Industries Belgium (C-393/04 and C-41/05, EU:C:2006:403, paragraph 43 et seq.).

41      On the relevance of this question, see, in particular, judgment of 27 October 2005, Distribution Casino France and Others (C-266/04 to C-270/04, C-276/04 and C-321/04 to C-325/04, EU:C:2005:657, paragraphs 40 and 41 and 45 et seq.).

42      See judgment of 6 November 2018, Scuola Elementare Maria Montessori v Commission, Commission v Scuola Elementare Maria Montessori and Commission v Ferracci (C-622/16 P to C-624/16 P, EU:C:2018:873, paragraph 90 et seq.).

43      Judgments of 3 March 2020, Vodafone Magyarország (C-75/18, EU:C:2020:139, paragraph 29 et seq.), and of 3 March 2020, Tesco-Global Áruházak (C-323/18, EU:C:2020:140, paragraph 41 et seq.).

44      Judgments of 16 March 2021, Commission v Poland (C-562/19 P, EU:C:2021:201, paragraph 27); of 28 June 2018, Andres (Insolvency of Heitkamp BauHolding) v Commission (C-203/16 P, EU:C:2018:505, paragraph 82); and of 21 December 2016, Commission v World Duty Free Group and Others (C-20/15 P and C-21/15 P, EU:C:2016:981, paragraph 53); and Commission v Hansestadt Lübeck (C-524/14 P, EU:C:2016:971, paragraph 40).

45      Judgments of 7 November 2013, Tulică and Plavoşin (C-249/12 and C-250/12, EU:C:2013:722, paragraph 34), and of 24 October 1996, Elida Gibbs (C-317/94, EU:C:1996:400, paragraph 19).

46      Judgments of 21 February 2008, Netto Supermarkt (C-271/06, EU:C:2008:105, paragraph 21), and of 20 October 1993, Balocchi (C-10/92, EU:C:1993:846, paragraph 25).

47      See, by way of example, judgments of 3 March 2020, Vodafone Magyarország (C-75/18, EU:C:2020:139, paragraph 62); of 11 October 2007, KÖGÁZ and Others (C-283/06 and C-312/06, EU:C:2007:598, paragraph 37 – ‘[VAT is] proportional to the price charged by the taxable person in return for the goods and services which he has supplied’); and of 18 December 1997, Landboden-Agrardienste (C-384/95, EU:C:1997:627, paragraphs 20 and 23).

48      Judgments of 14 December 2023, Commission v Amazon.com and Others (C-457/21 P, EU:C:2023:985, paragraph 33), and of 8 November 2022, Fiat Chrysler Finance Europe v Commission (C-885/19 P and C-898/19 P, EU:C:2022:859, paragraph 67 and the case-law cited).