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Brussels, 14 April 2009

Direct Taxation: The Commission refers Portugal to the European Court of Justice over its discriminatory taxation of lottery winnings

The European Commission has decided to refer Portugal to the European Court of Justice for its tax provisions which provide for taxation of the vast majority of foreign lottery winnings whereas winnings from national lotteries or from lotteries part of the European Euromillions network are exempt from income tax. The Commission considers these rules to be contrary to the EC Treaty and the EEA Agreement, as they restrict the freedom to provide services.

According to the Portuguese rules, income earned in Portugal in the form of prizes or winnings from competitions, games or gambling is subject to taxation. However, an exemption applies to lottery winnings from Euromilhões e Liga dos Milhões, lotteries and games organised by the Santa Casa da Misericórdia de Lisboa, an entity carrying out activities of social interest.

Following the reasoned opinion sent to Portugal y the European Commission in September 2008 (IP/08/1355), Portugal amended in December 2008 its legislation and extended the tax exemption to winnings from the State lotteries which are part of the European Euromillions network (i.e Euromillions lotteries from Belgium, France, Ireland, Luxembourg, Portugal, Spain, United Kingdom and Switzerland). However, Portugal did not extend the tax exemption to all foreign state lotteries: the winnings in respect of the vast majority of other state lotteries organised in other EU Member States and EEA countries, which are not part of the Euromillions network, continue to be taxed in the hands of Portuguese residents.

The Commission considers that the exemption provided in the Portuguese legislation constitutes a discrimination prohibited by the EC Treaty.

Taxing the winnings from foreign but not national lotteries cannot possibly be justified as a measure to avoid the damaging consequences of gambling.

The Commission's cases reference number is 2007/2138.

For the press releases issued on infringement procedures in the taxation or customs area see:

For the latest general information on infringement measures against Member States see:

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