Swedish tax case

A Swedish online poker player has been at least partially successful in fighting off the local taxman to keep winnings achieved at an online gambling website operating from the Isle of Man, although he is required to pay tax on winnings in Monaco.

The Swedish newspaper Östgöta Correspondenten reports that the case turned on membership of the European Union - the venues where he played differed in this respect. One Internet venue was in the Isle of Man, which belongs to the Union and does not levy tax on gaming winnings, whilst the other was in Monaco and therefore outside the EU, and tax is therefore due.

The gambler pleaded his case against the Swedish tax authorities, the Skatteverket, before the Länsrätten (county administrative court) in Östergoötland. The judge ruled that the man did not have to pay Swedish taxes on the SEK 650 000 kronor (about $80 900) he won playing online poker on a site based in the Isle of Man, due to its membership of the European Union.

However, winnings achieved whilst playing on a site in Monaco were treated differently, and the court ruled that tax in that case must be paid as Monaco was not a member of the Union.

The difference in tax treatment stems from European Union rules stipulating that winnings from games such as poker are free from taxes within the EU.

The Skatteverket had based its Isle of Man claim on the fact that not all EU tax rules apply on the island, which it considered a British territory. The court rejected Skatteverket's rationale, finding that even if an EU member state doesn't fully subscribe to all EU rules, a specifically cited regulation which is sufficiently precise and unconditional, such as EU gaming rules, can apply.

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