Tax dispute with European Commission enters a new phase

After months of haggling with the Portuguese government over its discriminatory tax practices on lottery winnings, the European Commission has referred the issue to the European Court of Justice for a judicial ruling.

The row has its roots in the Portuguese government's insistence on taxing foreign lottery winnings whilst domestic prizes remain exempt, thus prejudicing lottery providers outside the country in contravention of EU principles.

The discriminatory taxation was to some extent reduced last December following a "reasoned opinion" from the Commission , when the government exempted winnings from the European EuroMillions network, which includes EuroMillions lotteries from Belgium, France, Ireland, Luxembourg, Portugal, Spain, the UK and Switzerland. However, this apparently did not go far enough as it did not embrace all foreign state lotteries.

The Commission reiterated in a statement that - in its opinion - the current tax practices of the Portuguese government on lottery winnings remained in conflict with the European Commission Treaty, restricting competitive services. It rejected a counter argument that the discrimination was necessary to combat problem gambling, and the matter will now be judicially argued and decided.

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