Bwin.party prepares Spanish back-tax payment
Operator remains committed to securing a licence when the market opens and intends to pay 33m following a self-assessment despite co-CEO's claims that tax bill was "unfounded."
Bwin.party has announced its intention to pay up to 33m in back-taxes in order to facilitate its entry into the Spanish market, the operator has confirmed in a statement this morning.
The figure, which was arrived at following the completion of a self-assessment in line with requirements issued by the Spanish Tax Authority, includes surcharges and interest of 8m on top of a payment of 25.6m for the two-year period between 2009 and 2011.
Bwin.party is one of a number of operators expected to be hit with a tax bill ahead of the issuing of licences in Spain on 1 June, and it has acknowledged that the sum is required “Under two historic laws that previously were not applied to offshore online gaming.”
However it explains: “Having taken these steps, we believe we have now fulfilled all requirements and look forward to receiving our licence and entering the Spanish market.”
Analyst Simon French of Panmure Gordon said in a note this morning: “Effectively this is a cost of market entrance and should therefore be viewed as a commercial decision, albeit one that feels decidedly uncomfortable.”
The decision to pay the bill comes after co-CEO Norbert Teufelberger described the Tax Authority’s claim as “unfounded,” in an analyst call following the company’s quarterly results presentation last week. It remains unclear whether the authority will accept the payment based on the operator’s self-assessment, or seek a higher amount.
Meanwhile Sportingbet, which has applied for a Spanish licence under its Miapuesta brand, has revealed in a statement that it “Is in discussions with the Spanish Ministry of Finance about a potential outstanding tax liability covering its operations in Spain from January 2009 – May 2011.” A spokesman for the company confirmed to eGaming Review last week that it was liable for a consideration of less than 20m.
Sources in Spain had suggested bwin.party could face a bill of up to 60m while PokerStars could be ordered to pay as much as 200m before being allowed to enter the newly regulated market, although the former of these two estimates is far from the figure reached by bwin.party. Bet365 are also rumoured to be involved, though this remains unconfirmed.
Those operators impacted by the charges are thought to account for as much as 80% of egaming revenues in Spain.
In a poll of eGR readers last week, 40% of respondents believed at least some offshore operators would opt against entering the market rather than agree to the tax demands, although those polled expected the market share of these operators to be swallowed up by local brands.
Analyst Ed Birkin of Barclays Capital described the tax bills as “a blow” to operators active in the market over the two-year period, but added it could ensure the market was allowed to open on the fairest possible terms: “while this is an initial cash outflow, if it aids the licensing process and leads to more clarity in a key European market, this could be viewed as a positive in the medium term.
“A further risk, however, is that other regulating markets try to apply back taxes themselves, thus increasing the potential tax burden going forward,” he warned