Last week the European Court of Justice decided in the Lindman case that Finland cannot maintain a law that requires its citizens to pay an income tax on lottery winnings from other EU countries. The Administrative Court of Aland asked the Court of Justice to hear the case after it was appealed by a woman from Aland who won $117,000 in a Swedish Lottery in 1998 and was then ordered to pay a Finnish income tax. The ruling applies to earnings won from traditional foreign lotteries and from Internet lotteries.
The decision declared the income tax was a violation of free movement of services in the EU. While the government required winners of foreign lotteries to pay income tax, it exempted players from paying tax on earnings obtained from Finnish games of chance, including lotteries. Organizers of Finnish lotteries are required to pay a special lottery tax, but that tax rate is much higher than the income tax rate. The Court of Justice therefore ruled the income tax discriminatory.
Finland presented the argument that member states retain the right to impose restrictions on gambling as a means of protecting consumers and maintaining societal order. A similar argument had been successful for Portugal in the Anomar case, where it argued that its restrictions on gaming machines were justified by its concerns for public interest. For Finland, however, the argument was not able to compensate for the discrimination of foreign lotteries.
I-gaming law specialist, Philippe Vlaeminck, affirms that the ruling is consistent with previous ruling by the Court.
"This jurisprudence is in line with ECJ cases in other areas where the Court insisted upon the freedom for consumers to have access to a service in another jurisdiction," he said. "I have been expressing this view for more than 10 years."
According to the Helsingin Sanomat, Finland's Interior Ministry official Jouni Laiho calculates that Finnish citizens spend about $59 million on foreign Internet gambling sites per year.