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Brussels, 12 October 2006

Direct taxation: Commission requests Poland to end discriminatory taxation of foreign lotteries

The European Commission has sent Poland a formal request to end discriminatory taxation of foreign lotteries. Winnings from lotteries in other Member States are subject in Poland to a higher taxation than winnings in Polish lotteries. The Commission considers that this discrimination is contrary to the EC Treaty. The request is in the form of a ‘reasoned opinion’ under Article 226 of the EC Treaty. If Poland does not reply satisfactorily within two months the Commission may refer the matter to the European Court of Justice.

"Member States are free to set their own rules on betting and gambling" said EU Taxation and Customs Commissioner László Kovács. "But the EC Treaty requires that these rules are applied in the same way to domestic and foreign lotteries."

Poland exempts winnings from domestic lotteries or subjects them to a flat rate tax of 10%, whereas winning from lotteries in other Member States are taxed at the progressive income tax rates of 19 to 40%.

The higher taxation of winnings from foreign lotteries is a restriction of the freedom to provide services throughout the EU, guaranteed by Article 49 of the EC Treaty. The Commission is of the opinion that there is no justification for this restriction. This position is supported by two rulings of the European Court of Justice: Schindler, Case C-275/92 of 24 March 1994 and Lindman, Case C-42/02 of 13 November 2003.

The Commission's reference number is infringement 2005/2426.

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