POLAND

Poland – Gambling is illegal, but without VAT

Entrepreneurs who have arranged games on slot machines without permission do not have to pay 23-percent tax on goods and services – results from the judgment of the Provincial Administrative Court in Warsaw.

In the justification, the judge Artur Kuś explained that if gambling was legal, it does not affect the VAT exemption. It’s about art 43 par. 1 point 15 of the VAT Act, which says that exempt from tax is activity in the field of games of chance, mutual bets and games on machines, subject to tax on games.

The dispute with government in this case was taken by a man who illegally provided gaming machines with low prizes. Therefore, he did not settle the tax on games.

When customs officers caught him, he was obliged to pay the overdue VAT. The Office explained that the exemption from art. 43 par. 1 point 15 of the VAT Act applies only to those who have tried to obtain a license, and not those who organize games illegally. The entrepreneur argued that he was entitled to a dismissal. He relied on the case law of the EU Court of Justice, including judgments Acts C-453/02 and C-462/02. The CJEU ruled that the activity carried out without a permit should be treated on the basis of VAT as well as legal, because of the similarity. Otherwise, there would be a breach of competition rules.

The man won in the Administrative Court. Judge Artur Kuś explained that VAT can not be treated as a sanction to penalize undesirable behavior, because there are administrative fines and penal-fiscal sanctions.

He stressed that the principle of fiscal neutrality does not allow the same gambling game to be treated differently depending on whether it is organized in a legal or illegal manner. He pointed out that the Supreme Administrative Court in the case of June 28th, 2016, ref. No. I FSK 180/15 file (with a separate sentence) ruled the same.

The verdict of the Administrative Court is not final.

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