Legal disputes between Gibraltar and the United Kingdom should be treated as ones taking place within a single member of the European Union, according to the Court of Justice of the EU (CJEU).

The EU’s highest court issued on Tuesday its preliminary ruling on a dispute between the two parties stemming from the introduction and implementation of the Point of Consumption tax back in 2014.

Under a 2014 amendment of the UK Finance Act, all UK-facing online gambling operators were required to pay a 15% tax on their annual gross profits no matter whether they were located within the UK or anywhere else in the world.

The Gibraltar Betting and Gaming Association (GBGA), comprised of Gibraltar-based gambling operators, contested the newly introduced tax regime in the High Court of England and Wales. The High Court later on referred the case to the CJEU.

The trade association of Gibraltar-located operators argued that they should not be subjected to the POC tax and that it violated Article 56 of the Treaty on the Functioning of the European Union. Said article generally reads that any “restrictions to provide services” within EU borders are strictly prohibited.

The CJEU has found it necessary to define the status of Gibraltar within the UK and the European Union in order for the dispute to be solved. Under the Tuesday ruling, the headland located on Spain’s southern tip is a British Crown colony, but it does not constitute part of the United Kingdom. However, within the context of the EU, the UK and Gibraltar must be treated as a single Member State, the CJEU has ruled.

The EU’s highest court still needs to release its official ruling on the matter, but the Tuesday preliminary decision is indicative enough of CJEU’s stance.

Here it is also important to note that the Tuesday ruling somewhat repeats the view of Advocate General Maciej Szpunar who issued his written opinion on the issue earlier this year. Here it is important to note that the CJEU does not necessarily follow the views of its Advocate Generals, but it seems that it has in this case.

Online gambling is an important trade in Gibraltar as it accounts for around 25% of the British Overseas Territory’s GDP. This is why it has been very protective over its iGaming industry over the years.

Among other things, it can also be said that the Tuesday ruling sheds a bit more light on the way Gibraltar will be looked upon in the upcoming Brexit talks. After the results from the recent UK snap election wreaked great havoc among the Conservatives, Prime Minister Theresa May confirmed on Tuesday that Brexit negotiations between British officials and their Brussels counterparts will be formally opened on June 19.

The future of Gibraltar is expected to become one of the most contentious topics over the course of discussions. The territory has repeatedly pointed out its desire to remain part of the EU’s Single Market. However, the UK and Gibraltar being treated as a single Member State throws dark shadow over the latter’s ambitions.