C-73/23 Chaudfontaine Loisirs

JUDGMENT OF THE COURT (First Chamber)

12 September 2024 ( *1 )

(Reference for a preliminary ruling – Taxation – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 135(1)(i) – Exemptions – Betting, lotteries and other forms of gambling – Conditions and limits – Principle of fiscal neutrality – Maintenance of the effects of a piece of national legislation – Entitlement to refund – Unjust enrichment)

In Case C‑73/23,

REQUEST for a preliminary ruling under Article 267 TFEU from the tribunal de première instance de Liège (Court of First Instance, Liège, Belgium), made by decision of 30 January 2023, received at the Court on 10 February 2023, in the proceedings

Chaudfontaine Loisirs SA

v

État belge (SPF Finances),

interested party:

État belge (SPF Justice),

THE COURT (First Chamber),

composed of A. Arabadjiev, President of the Chamber, L. Bay Larsen (Rapporteur), Vice-President of the Court, T. von Danwitz, A. Kumin and I. Ziemele, Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

Chaudfontaine Loisirs SA, by Y. Spiegl and E. van Nuffel d’Heynsbroeck, avocats,

the Belgian Government, by S. Baeyens, P. Cottin and C. Pochet, acting as Agents,

the Czech Government, by L. Halajová, M. Smolek and J. Vláčil, acting as Agents,

the Portuguese Government, by P. Barros da Costa and A. Silva Coelho, acting as Agents,

the European Commission, by A. Armenia and M. Herold, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 25 April 2024,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of the third paragraph of Article 267 TFEU, the principle of fiscal neutrality and Article 135(1)(i) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

2The request has been made in proceedings between Chaudfontaine Loisirs SA and the État belge (SPF Finances) (Federal Public Finance Service, Belgium) (‘the Belgian tax authority’), concerning a decision relating to the value added tax (VAT) payable for the period from 1 July 2016 to 21 May 2018, as well as fines and late interest payments in relation to that VAT payable.

Legal context

European Union law

3Article 135(1)(i) of Directive 2006/112 provides:

‘Member States shall exempt the following transactions:

…

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

Belgian law

4Article 1(14) of the code de la taxe sur la valeur ajoutée (Value Added Tax Code) (Moniteur belge of 17 July 1969, p. 7046), as amended by the loi-programme du 1er juillet 2016 (Programme-Law of 1 July 2016), was worded as follows:

‘For the purposes of this Code, the following definitions shall apply:

1° “games of chance or gambling”:

games, under whatever name, which offer the chance to win prizes or awards in cash or in kind, and in which the players cannot intervene either at the beginning, during or at the end of the game, and the winners are determined solely by luck or by any other circumstance due to chance;

games, under whatever name, which offer participants in a competition of any kind the chance to win prizes or awards in cash or in kind, unless the competition leads to the conclusion of a contract between the winners and the organiser of that competition;

2° “lotteries”: every circumstance which permits the purchase of lottery tickets, to compete for prizes or awards in cash or in kind, where the winners are determined by luck or by any other circumstances due to chance, over which they cannot exercise any influence.’

5Article 44(3) of the Value Added Tax Code, as amended by the Programme Law of 1 July 2016, provides:

‘The following shall also be exempt from the tax:

…

13°

lotteries;

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

The dispute in the main proceedings and the questions referred for a preliminary ruling

6Chaudfontaine Loisirs offers online gambling.

7That activity was exempt from VAT in Belgium until 1 July 2016, when provisions were adopted repealing the VAT exemption for online gambling other than lotteries.

8Those provisions were annulled by the Cour constitutionnelle (Constitutional Court, Belgium), by judgment of 22 March 2018, on account of the infringement of rules allocating powers between the Federal State of Belgium and the Belgian regions laid down by Belgian law. In that judgment, that court did not examine the other pleas before it, in particular those alleging infringement of Directive 2006/112, the principle of fiscal neutrality and Articles 107 and 108 TFEU, taking the view that those pleas could not lead to a more extensive annulment of those provisions. In that judgment, that court also decided to maintain the effects of those provisions by referring to the budgetary and administrative difficulties which the refund of taxes already paid would cause.

9In a judgment of 8 November 2018, the Cour constitutionnelle (Constitutional Court) stated that the effects of the provisions repealing the VAT exemption for online gambling other than lotteries, which it annulled by its judgment of 22 March 2018, were maintained in respect of taxes which had been paid for the period from 1 July 2016 to 21 May 2018.

10Following those judgments, in the part of its VAT return for November 2019, relating to the VAT adjustments in its favour, Chaudfontaine Loisirs entered an amount of EUR 640 478.82, which corresponds to the amount of VAT paid for the period from 1 July 2016 to 21 May 2018, and requested a refund of a balance of VAT of EUR 630 240.56.

11It reiterated that request in a letter of 16 December 2019, in which it stated that the Court had held, in its judgment of 27 June 2019, Belgisch Syndicaat van Chiropraxie and Others (C‑597/17, EU:C:2019:544), that a national court may not make use of a national provision empowering it to maintain certain effects of an annulled measure.

12By decision of 1 December 2020, the Belgian tax authority rejected that request and stated that that judgment concerned a situation in which the annulled national provisions had been found to be contrary to Directive 2006/112, whereas, in its judgment of 22 March 2018, the Cour constitutionnelle (Constitutional Court) had annulled the national provisions at issue in the main proceedings because of an infringement of the rules allocating powers laid down by Belgian law.

13On 7 December 2020, a statement of adjustment was drawn up by the Belgian tax authority, in which they stated that Chaudfontaine Loisirs owed an amount of EUR 640 478.82 in respect of VAT, an amount of EUR 64 047.88 in respect of fines and late interest payments at a rate of 0.8% per month on the amount of VAT payable from 21 December 2019.

14On 13 April 2021, Chaudfontaine Loisirs brought an action before the tribunal de première instance de Liège (Court of First Instance, Liège, Belgium), which is the referring court, against that decision and that statement of adjustment. It claims, in the alternative, that the Belgian State is liable on account of fault on the part of the Cour constitutionnelle (Constitutional Court), in that that court decided to maintain the effects of the provisions which it annulled and, in the further alternative, the liability of the Belgian State on account of a fault on the part of the legislature.

15In those circumstances, the tribunal de première instance de Liège (Court of First Instance, Liège) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Do Article 135(1)(i) of [Directive 2006/112] and the principle of fiscal neutrality permit a Member State to exclude from the benefit of the exemption contained in that provision only gambling which is provided electronically while gambling which is not provided electronically remains exempt from VAT?

Do Article 135(1)(i) of [Directive 2006/112] and the principle of fiscal neutrality permit a Member State to exclude from the benefit of the exemption contained in that provision only gambling which is provided electronically to the exclusion of lotteries which remain exempt from VAT whether or not they are provided electronically?

Does the third paragraph of Article 267 of the [TFEU] permit a higher court to decide to maintain the effects of a provision of national law which it annuls because of an infringement of national law without ruling on the infringement of EU law which was also raised before it, and, therefore, without referring for a preliminary ruling the question of the compatibility of that provision of national law with EU law or asking the Court about the circumstances in which it could decide to maintain the effects of that provision in spite of its incompatibility with EU law?

If the answer to one of the previous questions is in the negative, could the [Cour constitutionelle (Constitutional Court)] maintain the past effects of the provisions which it annulled because of their incompatibility with national rules on the division of powers when those provisions were also incompatible with [Directive 2006/112], in order to prevent budgetary and administrative difficulties from arising from reimbursement of taxes already paid?

If the answer to the previous question is in the negative, can the taxable person be reimbursed the VAT which it has paid on the actual gross margin on the gaming and betting which it operates on the basis of provisions incompatible with [Directive 2006/112] and the principle of fiscal neutrality?’

The application to reopen the oral part of the procedure

16After the Advocate General delivered her Opinion at the sitting on 25 April 2024, Chaudfontaine Loisirs, by letter received at the Court Registry on 5 June 2024, requested the Court to order the reopening of the oral part of the procedure.

17In support of that request, Chaudfontaine Loisirs submits that the Opinion addresses a question of law relating to the recognition of direct effect in Article 135(1)(i) of Directive 2006/112 which was not submitted to the Court by the referring court and on which it has therefore been unable to submit its observations. Chaudfontaine Loisirs also disagrees with the Advocate General’s Opinion on that point.

18In that regard, it should be noted that, in accordance with Article 83 of its Rules of Procedure, the Court may at any time, after hearing the Advocate General, order the reopening of the oral part of the procedure, in particular if it considers that it lacks sufficient information or where the case must be decided on the basis of an argument which has not yet been debated between the parties.

19It must also be borne in mind that the Statute of the Court of Justice of the European Union and the Rules of Procedure make no provision for the parties to submit observations in response to the Advocate General’s Opinion (judgment of 31 January 2023, Puig Gordi and Others, C‑158/21, EU:C:2023:57, paragraph 37 and the case-law cited).

20Furthermore, under the second paragraph of Article 252 TFEU, the Advocate General, acting with complete impartiality and independence, is to make, in open court, reasoned submissions on cases which, in accordance with the Statute of the Court of Justice of the European Union, require the Advocate General’s involvement. The Court is not bound either by the Advocate General’s Opinion or by the reasoning which led thereto. Consequently, a party’s disagreement with the Advocate General’s Opinion, irrespective of the questions that he or she examines in his or her Opinion, cannot in itself constitute grounds justifying the reopening of the oral part of the procedure (judgment of 31 January 2023, Puig Gordi and Others, C‑158/21, EU:C:2023:57, paragraph 38 and the case-law cited).

21In the present case, the Court considers, after hearing the Advocate General, that it has all the information necessary to give a ruling.

22In particular, in the light of the case-law referred to in paragraph 20 above, it should be noted that, contrary to Chaudfontaine Loisirs’ submissions in support of its request for the reopening of the oral part of the procedure, in so far as the fifth question referred for a preliminary ruling concerns the effects which must be attributed to Article 135(1)(i) of Directive 2006/112 before a national court, the referring court necessarily asked the Court of Justice whether that provision should be recognised as having direct effect. It follows that Chaudfontaine Loisirs had the opportunity to put forward its point of view in that regard.

23Consequently, the Court considers that it is not necessary to order the reopening of the oral part of the procedure.

Consideration of the questions referred

The first and second questions

24By its first and second questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 135(1)(i) of Directive 2006/112, read in conjunction with the principle of fiscal neutrality, must be interpreted as precluding national legislation which differentiates between, on the one hand, the purchase of lottery tickets and participation in other forms of gambling offered offline and, on the other hand, participation in forms of gambling other than lotteries offered online, by excluding the latter from the VAT exemption applicable to the former.

25According to Article 135(1)(i) of Directive 2006/112, betting, lotteries and other forms of gambling are exempt from VAT, subject to the conditions and limitations laid down by each Member State.

26It is apparent from the actual wording of that provision that it leaves a broad discretion to the Member States as regards the exemption or the taxation of the transactions concerned since it allows those States to fix the conditions and the limitations to which entitlement to that exemption may be made subject (see, by analogy, judgment of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 40 and the case-law cited).

27In addition, the Court has stated that the exercise of the discretionary power of the Member States to fix conditions and limitations on the VAT exemption provided for under that provision allows those States to exempt from that tax only certain forms of betting and gaming (judgment of 24 October 2013, Metropol Spielstätten, C‑440/12, EU:C:2013:687, paragraph 29 and the case-law cited).

28However, when the Member States exercise their power under that provision to lay down the conditions and limitations of the exemption and, therefore, to determine whether or not transactions are subject to VAT, they must respect the principle of fiscal neutrality inherent in the common system of VAT (judgment of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 41 and the case-law cited).

29According to settled case-law, the principle of fiscal neutrality precludes treating similar goods and supplies of services, which are thus in competition with each other, differently for VAT purposes (judgment of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 32 and the case-law cited).

30In order to determine whether two supplies of services are similar, account must be taken of the point of view of the average consumer, avoiding artificial distinctions based on insignificant differences (see, to that effect, judgment of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 43 and the case-law cited).

31Two supplies of services are therefore 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 such service or the other (judgment of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 44 and the case-law cited).

32In other words, it is necessary to determine whether the services at issue are interchangeable from the point of view of the average consumer. If that is the case, a difference in treatment for VAT purposes might affect the consumer’s choice, which, in turn, would indicate an infringement of the principle of fiscal neutrality (see, to that effect, judgment of 3 February 2022, Finanzamt A, C‑515/20, EU:C:2022:73, paragraph 45 and the case-law cited).

33In that regard, it is necessary to take account of not only the differences in the characteristics of the services at issue and the use of those services which are, therefore, inherent to those services, but also the differences relating to the context in which those services are supplied, to the extent that those contextual differences may create a distinction in the eyes of the average consumer, in terms of the satisfaction of his or her own needs, and may, therefore, influence that consumer’s decision (see, to that effect, judgment of 9 September 2021, Phantasialand, C‑406/20, EU:C:2021:720, paragraphs 41 and 42 and the case-law cited).

34Thus, the Court has held that cultural factors, such as customs or traditions, may be relevant in the context of such an examination (see, to that effect, judgment of 9 September 2021, Phantasialand, C‑406/20, EU:C:2021:720, paragraph 44).

35Moreover, the Court has stated, as regards gambling, that differences relating to the minimum and maximum stakes and prizes, the chances of winning, the formats available and the possibility of interaction between the player and the game are liable to have a considerable influence on the decision of the average consumer, as the attraction of games of chance or gambling lies chiefly in the possibility of winning (see, to that effect, judgment of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 57).

36However, it must be borne in mind that the identity of the providers, the legal form by means of which they exercise their activities, the licensing category the games concerned fall into and the applicable legal regime relating to control and regulation are, as a rule, irrelevant to the assessment of the comparability of those categories of games (see, by analogy, judgment of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraphs 46 and 51).

37In the present case, it is apparent from the order for reference that the legislation at issue establishes a twofold difference in treatment. First, that legislation distinguishes lotteries from other forms of gambling, by exempting from VAT any purchase of lottery tickets, whether online or offline. Second, that legislation establishes a difference in treatment between games of chance and gambling other than online and offline lotteries, by excluding online gambling from the exemption applicable to offline games.

38Although it is for the referring court alone to assess, in the light of the considerations set out in paragraphs 29 to 37 above, whether those services are similar, it is for the Court to provide some useful indications in that regard to enable the referring court to decide the case before it (see, to that effect, judgment of 20 June 2024, GEMA, C‑135/23, EU:C:2024:526, paragraph 32).

39In particular, it should be noted that cultural factors and differences relating to the minimum and maximum stakes and winnings and the chances of winning may create a distinction, in the eyes of the average consumer, both between lotteries and other forms of gambling and between forms of gambling other than lotteries offered online and offline.

40As regards, more specifically, in the first place, the examination of the similarity of lotteries and other forms of gambling, it is apparent from the order for reference that, in accordance with the national legislation at issue in the main proceedings, first, unlike other forms of gambling, in which the abilities of the player, such as skill or knowledge, may have an influence on the likelihood of winning, in the context of lotteries within the meaning of that legislation, the winners are determined solely by chance, without their abilities exercising any influence in that regard. Secondly, in that context, since the winner is determined on a specific date, the period between the purchase of the lottery ticket and the result may be significant.

41Lotteries, as defined by the national legislation at issue in the main proceedings, are accordingly characterised by a combination of a waiting period for the determination of winners and the complete absence of influence of the abilities of players on the outcome of the game.

42Such objective differences in relation to other forms of gambling appear likely to have a considerable influence on the decision of the average consumer to use one or other category of games, which it is, however, for the referring court to ascertain.

43As regards, in the second place, the examination of whether participation in forms of gambling other than lotteries offered online and offline is similar, account must be taken, in particular, of the contextual factors surrounding those games.

44Differences relating to the geographical and temporal accessibility of games, the possibilities of anonymity and the physical or virtual nature of the interactions between players or between players and the organisers of games appear likely to have a considerable influence on the decision of the average consumer to use one or other category of games, which it is, however, for the referring court to ascertain.

45In the light of the considerations set out in paragraphs 29 to 44 above, it seems, at first glance, that the services referred to in paragraph 37 above are not similar, which means that the differences in treatment such as those at issue in the main proceedings are compatible with the principle of fiscal neutrality. It is nevertheless for the referring court to ascertain specifically, in the light of all relevant evidence, whether that legislation infringes that principle.

46Consequently, the answer to the first and second questions is that Article 135(1)(i) of Directive 2006/112, read in conjunction with the principle of fiscal neutrality, must be interpreted as not precluding national legislation which differentiates between, on the one hand, the purchase of lottery tickets and participation in other forms of gambling offered offline and, on the other hand, participation in forms of gambling other than lotteries offered online, by excluding the latter from the VAT exemption applicable to the former, provided that the objective differences between those categories of gambling are liable to have a considerable influence on the decision of the average consumer to use one or other of those categories of games.

The third and fourth questions

47By its third and fourth questions, which it is appropriate to examine together, the referring court asks, in essence, whether the third paragraph of Article 267 TFEU must be interpreted as meaning that a national court against whose decisions there is no judicial remedy may make use of a national provision empowering it to maintain the effects of national provisions which it has held to be incompatible with the higher-ranking rules of its national law, without examining a claim that those provisions are also incompatible with EU law and without referring to the Court of Justice those questions concerning the interpretation of EU law.

48According to settled case-law, in the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the national court with an answer which will be of use to it and enable it to decide the case before it. To that end, the Court should, where necessary, reformulate the questions referred to it (judgment of 16 May 2024, Toplofikatsia Sofia (Concept of the defendant’s domicile), C‑222/23, EU:C:2024:405, paragraph 63 and the case-law cited).

49The Court may extract from all the information provided by the national court, in particular from the grounds of the decision to make the reference, the legislation and the principles of EU law that require interpretation in view of the subject matter of the dispute in the main proceedings (judgment of 21 March 2024, Dyrektor Izby Administracji Skarbowej w Bydgoszczy (Possibility of adjustment in the case of incorrect rate), C‑606/22, EU:C:2024:255, paragraph 20 and the case-law cited).

50In the present case, although the third and fourth questions concern the obligations which EU law imposes on a national court against whose decisions there is no judicial remedy, it is apparent from the order for reference that that question is referred by a national court of first instance, which is uncertain as to the consequences of the possible incompatibility with Article 135(1)(i) of Directive 2006/112, read in conjunction with the principle of fiscal neutrality, of a national provision which has been annulled by the constitutional court of its Member State on the ground of infringement of higher-ranking rules of its national law, the effects of which have been maintained by that constitutional court.

51In that context, it thus appears that the referring court is called upon, in the main proceedings, not to rule directly on the conduct of the constitutional court of its Member State, but, where necessary, to draw the appropriate inferences from the incompatibility of that national provision with EU law in a dispute between a taxable person and a tax authority concerning the amount of VAT payable by that taxable person.

52In those circumstances, it is necessary to reformulate the third and fourth questions referred for a preliminary ruling to the effect that, by those questions, the referring court asks, in essence, whether the principle of sincere cooperation as enshrined in Article 4(3) TEU and the principle of the primacy of EU law require the national court to disapply the national provisions held to be incompatible with Article 135(1)(i) of Directive 2006/112, read in conjunction with the principle of fiscal neutrality, the existence of a judgment of the national constitutional court deciding to maintain the effects of those national provisions being irrelevant in that regard.

53It is clear from the settled case-law of the Court that, under the principle of cooperation in good faith laid down in Article 4(3) TEU, Member States are required to nullify the unlawful consequences of a breach of European Union law, and that such an obligation is owed, within the sphere of its competence, by every organ of the Member State concerned (judgment of 5 October 2023, Osteopathie Van Hauwermeiren, C‑355/22, EU:C:2023:737, paragraph 27 and the case-law cited).

54Therefore, where the authorities of the Member State concerned find that national legislation is incompatible with EU law, while they retain the choice of the measures to be taken, they must ensure that national law is brought into line with EU law as soon as possible, and that the rights which individuals derive from EU law are given full effect (judgment of 5 October 2023, Osteopathie Van Hauwermeiren, C‑355/22, EU:C:2023:737, paragraph 28 and the case-law cited).

55It should also be recalled that, in accordance with the principle of the primacy of EU law, the national court called upon within the exercise of its jurisdiction to apply provisions of EU law is under a duty, where it is unable to interpret national law in compliance with the requirements of EU law, to give full effect to the requirements of EU law in the dispute brought before it, by disapplying, as required, of its own motion, any national rule or practice, even if adopted subsequently, that is contrary to a provision of EU law with direct effect, without it having to request or await the prior setting aside of that national rule or practice by legislative or other constitutional means (judgment of 22 February 2022, RS (Effect of the decisions of a constitutional court), C‑430/21, EU:C:2022:99, paragraph 53 and the case-law cited).

56Article 135(1)(i) of Directive 2006/112 has direct effect (see, by analogy, judgment of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 69 and the case-law cited).

57It is true that, as has been pointed out in paragraph 26 above, that provision leaves the Member States a broad discretion when adopting legislation laying down the conditions and fixing the limitations of the VAT exemption provided for by that provision.

58That being so, the fact that the Member States have, under a provision of a directive, a margin of discretion does not preclude judicial review from being carried out in order to ascertain whether the national authorities have exceeded that discretion (see, to that effect, judgments of 9 October 2014, Traum, C‑492/13, EU:C:2014:2267, paragraph 47; of 8 March 2022, Bezirkshauptmannschaft Hartberg-Fürstenfeld (Direct effect), C‑205/20, EU:C:2022:168, paragraph 30; and of 27 April 2023, M.D. (Ban on entering Hungary), C‑528/21, EU:C:2023:341, paragraph 98).

59The limits of that margin of discretion result, in particular, from the principle of fiscal neutrality. Accordingly, the Court has held previously that, where the conditions or limitations which a Member State imposes on the exemption from VAT for games of chance or gambling are contrary to the principle of fiscal neutrality, that Member State cannot rely on such conditions or limitations to refuse an operator of such games the exemption which he or she may legitimately claim under Directive 2006/112 (see, to that effect, judgment of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 68).

60It must also be borne in mind that only the Court may, in exceptional cases, on the basis of overriding considerations of legal certainty, allow the temporary suspension of the ousting effect of a rule of EU law with respect to national law that is contrary thereto. Such a restriction on the temporal effects of the interpretation of that law, made by the Court, may be granted only in the actual judgment ruling upon the interpretation requested (judgment of 5 October 2023, Osteopathie Van Hauwermeiren, C‑355/22, EU:C:2023:737, paragraph 30 and the case-law cited).

61The primacy and uniform application of EU law would be undermined if national courts had the power to give provisions of national law primacy in relation to EU law contravened by those provisions, even temporarily (judgment of 5 October 2023, Osteopathie Van Hauwermeiren, C‑355/22, EU:C:2023:737, paragraph 31 and the case-law cited).

62The principle of primacy accordingly obliges the national court to disapply national provisions held to be contrary to EU law having direct effect, even where the national constitutional court has previously deferred the date on which those provisions, held to be unconstitutional, are to lose their binding force (see, to that effect, judgment of 19 November 2009, Filipiak, C‑314/08, EU:C:2009:719, paragraph 85).

63The Court has also stated that the national court, having exercised the discretion conferred on it by the second paragraph of Article 267 TFEU, is bound, for the purposes of the decision to be given in the main proceedings, by the interpretation of the provisions at issue given by the Court and must, if necessary, disregard the rulings of the higher court if it considers, having regard to that interpretation, that they are not consistent with European Union law (judgment of 5 October 2010, Elchinov, C‑173/09, EU:C:2010:581, paragraph 30).

64Having regard to the foregoing considerations, the answer to the third and fourth questions is that the principle of sincere cooperation as enshrined in Article 4(3) TEU and the principle of the primacy of EU law require the national court to disapply the national provisions held to be incompatible with Article 135(1)(i) of Directive 2006/112, read in conjunction with the principle of fiscal neutrality, the existence of a judgment of the national constitutional court deciding to maintain the effects of those national provisions being irrelevant in that regard.

The fifth question

65By its fifth question, the referring court asks, in essence, whether a taxable person may be refunded the VAT paid, in breach of Directive 2006/112 and of the principle of fiscal neutrality, on the actual gross margin of gambling and betting which that taxable person offers.

66In the present case, although the referring court refers, in its fifth question, to the method of calculating the refund of VAT paid in breach of EU law, it should be noted that it does not provide any explanation in that regard in its order for reference.

67By contrast, it is apparent from that decision that, by its fifth question, the referring court asks whether, if it were to find that Article 135(1)(i) of Directive 2006/112, read in conjunction with the principle of fiscal neutrality, precludes the national legislation at issue in the main proceedings, the applicant in the main proceedings would have a right to a refund of the amount of VAT paid on the basis of that legislation.

68That question must therefore be understood as concerning the interpretation of the rules of EU law on recovery of amounts wrongly paid (see, by analogy, judgment of 6 September 2011, Lady & Kid and Others, C‑398/09, EU:C:2011:540).

69In those circumstances, and in the light of the case-law referred to in paragraphs 48 and 49 above, it is necessary to reformulate the fifth question referred for a preliminary ruling to the effect that, by that question, the referring court asks, in essence, whether the rules of EU law on recovery of amounts wrongly paid must be interpreted as meaning that they confer on a taxable person a right to a refund of the amount of VAT collected in a Member State in breach of Article 135(1)(i) of Directive 2006/112.

70It is settled case-law that the right to a refund of taxes levied by a Member State in breach of the rules of EU law is the consequence and complement of the rights conferred on individuals by provisions of EU law prohibiting such taxes, as interpreted by the Court. A Member State is, therefore, in principle required to repay charges levied in breach of EU law (judgment of 28 September 2023, Administrația Județeană a Finanțelor Publice Brașov (Transfer of the right to reimbursement), C‑508/22, EU:C:2023:715, paragraph 34 and the case-law cited).

71It appears from this that the right to the recovery of sums unduly paid helps to offset the consequences of the duty’s incompatibility with EU law by neutralising the economic burden which that duty has unduly imposed on the operator who, in the final analysis, has actually borne it (judgment of 16 May 2013, Alakor Gabonatermelő és Forgalmazó, C‑191/12, EU:C:2013:315, paragraph 24 and the case-law cited).

72However, by way of exception, such a refund may be refused where it entails unjust enrichment of the persons concerned. The protection of the rights so guaranteed by the legal order of the European Union does not require the refund of taxes, charges and duties levied in breach of EU law where it is established that the person required to pay such charges has actually passed them on to other persons (see, to that effect, judgments of 16 May 2013, Alakor Gabonatermelő és Forgalmazó, C‑191/12, EU:C:2013:315, paragraph 25, and of 21 March 2024, Dyrektor Izby Administracji Skarbowej w Bydgoszczy (Possibility of adjustment in the case of incorrect rate), C‑606/22, EU:C:2024:255, paragraphs 34 and 35).

73That exception must nevertheless be interpreted restrictively, taking account in particular of the fact that passing on a charge to the consumer does not necessarily neutralise the economic effects of the tax on the taxable person (see, to that effect, judgment of 2 October 2003, Weber’s Wine World and Others, C‑147/01, EU:C:2003:533, paragraph 95).

74Accordingly, even where it is established that the burden of the charge levied though not due has been passed on to third parties, the refund of that charge to the taxable person of the amount thus passed on does not necessarily entail that taxable person’s unjust enrichment, since even where the charge is wholly incorporated in the price, the taxable person may suffer as a result of a fall in the volume of that taxable person’s sales (see, to that effect, judgments of 6 September 2011, Lady & Kid and Others, C‑398/09, EU:C:2011:540, paragraph 21, and of 21 March 2024, Dyrektor Izby Administracji Skarbowej w Bydgoszczy (Possibility of adjustment in the case of incorrect rate), C‑606/22, EU:C:2024:255, paragraph 28).

75It must also be borne in mind that the existence and the measure of unjust enrichment which the refund of a charge levied though not due from the point of view of EU law would entail for a taxable person can be established only following an economic analysis which takes account of all the relevant circumstances (see, to that effect, judgments of 10 April 2008, Marks & Spencer, C‑309/06, EU:C:2008:211, paragraph 43, and of 21 March 2024, Dyrektor Izby Administracji Skarbowej w Bydgoszczy (Possibility of adjustment in the case of incorrect rate), C‑606/22, EU:C:2024:255, paragraph 38).

76It follows that the answer to the fifth question is that the rules of EU law on the recovery of amounts wrongly paid must be interpreted as meaning that they confer on a taxable person a right to a refund of the amount of VAT collected in a Member State in breach of Article 135(1)(i) of Directive 2006/112, provided that that refund does not entail the unjust enrichment of that taxable person.

Costs

77Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (First Chamber) hereby rules:

Article 135(1)(i) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with the principle of fiscal neutrality,

must be interpreted as not precluding national legislation which differentiates between, on the one hand, the purchase of lottery tickets and participation in other forms of gambling offered offline and, on the other hand, participation in forms of gambling other than lotteries offered online, by excluding the latter from the value added tax exemption applicable to the former, provided that the objective differences between those categories of gambling are liable to have a considerable influence on the decision of the average consumer to use one or other of those categories of games.

The principle of sincere cooperation as enshrined in Article 4(3) TEU and the principle of the primacy of EU law require the national court to disapply the national provisions held to be incompatible with Article 135(1)(i) of Directive 2006/112, read in conjunction with the principle of fiscal neutrality, the existence of a judgment of the national constitutional court deciding to maintain the effects of those national provisions being irrelevant in that regard.

The rules of EU law on the recovery of amounts wrongly paid must be interpreted as meaning that they confer on a taxable person a right to a refund of the amount of the value added tax collected in a Member State in breach of Article 135(1)(i) of Directive 2006/112, provided that that refund does not entail the unjust enrichment of that taxable person.

Signatures

[Signatures]

( *1 ) Language of the case: French.

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 25 April 2024 ¹

(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)

I. Introduction

‘By gaming we lose both our time and treasure – two things most precious [in] life …’ (Owen Feltham, English writer, 1602-1668).

1Although 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’.

2Belgium has opted no longer to exempt online gambling (except online lotteries) from VAT since 1 July 2016. Other forms of gambling, however, remain exempt from VAT. Online gambling providers in Belgium consider this selective exemption to be an infringement of the principle of neutrality. In the similar case of Casino de Spa and Others (C‑741/22), ³ they also consider the exemption of other gambling providers to be 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.

3Although 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

4Article 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:

…

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

B. Belgian law

5Originally, transactions relating to non-lottery gambling were also 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.

6However, the Cour constitutionnelle (Constitutional Court, Belgium) annulled the provisions in question of the Programme Law of 1 July 2016 with effect from 21 May 2018 on account of the infringement of national rules on competences. 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.

III. Facts and preliminary ruling procedure

7Chaudfontaine Loisirs SA (‘the applicant’) operates an ‘online casino’. It requests reimbursement of a principal amount of EUR 640 478.82 which it paid in VAT on online gambling and betting occurring between 1 July 2016 and 21 May 2018.

8By decision of 1 December 2020, the administration rejected that request on the ground that the conditions for reimbursement were not fulfilled. The applicant then brought the matter before the referring court.

9The applicant maintains, first, that the VAT at issue was levied in breach of the principle of fiscal neutrality governing the VAT Directive. It complains, next, that the effects of the annulled law were maintained for the period in question. The defendant Belgian State, on the other hand, recalls the discretionary power of Member States to exempt certain categories of games from and to subject others to VAT. Furthermore, the provisions annulled by the Cour constitutionnelle (Constitutional Court), which were ordered to be maintained in force for a limited period, do not constitute a defective transposition of the VAT Directive.

10The tribunal de première instance de Liège (Court of First Instance, Liège, Belgium) seised of the action stayed the proceedings and referred the following five questions to the Court of Justice for a preliminary ruling under Article 267 TFEU:

Do Article 135(1)(i) of [the VAT Directive] and the principle of fiscal neutrality permit a Member State to exclude from the benefit of the exemption contained in that provision only gambling which is provided electronically while gambling which is not provided electronically remains exempt from VAT?

Do Article 135(1)(i) of [the VAT Directive] and the principle of fiscal neutrality permit a Member State to exclude from the benefit of the exemption contained in that provision only gambling which is provided electronically (to the exclusion of lotteries, which remain exempt from VAT whether or not they are provided electronically)?

Does the third paragraph of Article 267 of the Treaty on the Functioning of the European Union permit a higher court to decide to maintain the effects of a provision of national law which it annuls because of an infringement of national law without ruling on the infringement of EU law which was also raised before it, and, therefore, without referring for a preliminary ruling the question of the compatibility of that provision of national law with EU law or asking the Court about the circumstances in which it could decide to maintain the effects of that provision in spite of its incompatibility with EU law?

If the answer to one of the previous questions is in the negative, could the constitutional court maintain the past effects of the provisions which it annulled because of their incompatibility with national rules on the division of powers when those provisions were also incompatible with [the VAT Directive], in order to prevent budgetary and administrative difficulties from arising from reimbursement of taxes already paid?

If the answer to the previous question is in the negative, can the taxable person be reimbursed the VAT which it has paid on the actual gross margin on the gaming and betting which it operates on the basis of provisions incompatible with [the VAT Directive] and the principle of fiscal neutrality?’

11The applicant, the Kingdom of Belgium, Portugal, 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

12The five questions can essentially be broken down into two sets.

13Since the applicant in the main proceedings is challenging the levying of VAT on its services under national law, Questions 1, 2 and 5 relate to whether the applicant’s 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).

14Questions 3 and 4, on the other hand, relate to whether the Constitutional Court in Belgium was able to order the maintenance in force of national law without a prior reference for a preliminary ruling, which is why the tax arose under national law in the first place. This raises the question as to the admissibility of those two questions (A).

A. Admissibility of Questions 3 and 4

15Questions 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.

16In 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

17Even 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).

18National 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, 2 and 5). Whether the Belgian Constitutional Court could or even should have made a reference to the Court of Justice before ordering that the law be maintained in force is irrelevant.

19Furthermore, 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.

20Lastly, the referring court does not inform the Court of Justice of what the Belgian 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. Consequently, only Questions 1, 2 and 5 need to be answered.

B. The exemption of online gambling pursuant to the VAT Directive (Questions 1, 2 and 5)

21In 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?

22According 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

23A 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

24In 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 (chosen by the Member States) of gambling can be exempted.

25Nor 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.

26It 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

27However, 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

28The 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

29The 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

30The 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 1977 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

31This 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.

32In 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 that exemption has no direct effect.

33However, 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, 2 and 5. 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?

34The 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, that 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

35Goods 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.

36In 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

37In 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.

38Consequently, where EU law grants such discretion to a Member State, it is the elected parliament of that Member State that is primarily 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.

39On that basis, the Court may also, 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. 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.

40For 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).

41In the light of this limited power of review of the Court, 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.

42For 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’.

43Having 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.

44The 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.

45Consequently, it is not sufficient for different types of gambling to satisfy a comparable gambling need (or a comparable gambling addiction) in order to find an infringement of the principle of neutrality. 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 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.

46As 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, the Czech Republic, Portugal and Belgium submit.

47The distinction in Belgium between online lotteries and other forms of online gambling too cannot 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

48Furthermore, the history of lotteries and also 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

49Article 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.

V. Conclusion

50I therefore propose that the questions referred by the tribunal de première instance de Liège (Court of First Instance, Liège, Belgium) be answered as follows:

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

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.

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 und Akritidis (C‑453/02 and C‑462/02, EU:C:2005:92, point 2 of 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 6[9]), 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 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 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, judgment 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.