EGBA: German poker and slots tax could shrink channelisation to 51%
Pan-European trade body rails against “punitive” 5.3% turnover tax citing disparity between online and land-based operations
The European Gaming and Betting Association (EGBA) has claimed a 5.3% turnover tax on German online poker and slots could reduce channelisation to the regulated market to as little as 51%.
The trade body cited recent survey data from Goldmedia, which suggested as many as 49% of German slots and poker players would move to the unregulated sector if the tax was introduced by the German Bundesrat.
“Players outside of the regulated market would be deprived of the protection of German consumer laws, rendering the proposed tax incompatible with the key objective of the country’s new online gambling regulation due to enter into force on 1 July 2021,” the EGBA said.
The trade body criticised the “punitive and unfair” tax proposals, which it claimed would result in online operators being taxed at rates of between four and five times higher than their counterparts and competitors in the land-based sector.
This rises to a disparity of 15 times for online slots operators in comparison to retail slots.
“This would provide a substantial and unfair tax advantage to Germany’s land-based operators over their online counterparts,” wrote the trady body. “The EGBA believes that this would constitute an illegal state aid under EU law.”
The EGBA highlighted Goldmedia’s example of the Bavarian market, where the tax advantage would be as high as €290m (£251m).
Requesting a review of the tax proposals with a view to imposing alternative tax rates in line with other EU member states, the EGBA said lower taxes would ensure the success of the country’s soon-to-be regulated market.
The trade body has said it will “consider all options” if the tax rate is approved, including filing a formal state aid complaint with the European Commission (EC).
In previous cases involving the Danish market, the EC ruled that different tax treatment between online and land-based operators qualified as state aid under EU law.
“We welcome the regulation of the German online gambling market and we fully appreciate that an online gambling tax will need to be paid,” EGBA secretary general Maarten Haijer said.
“However, we urge the German parliament to reconsider the proposed punitive rate of the tax because it will push German players to use unprotected and unregulated black market websites and give land-based operators a massive tax advantage.
“We stand ready to share our experiences in other jurisdictions of the EU and firmly believe that a tax level can be established which strikes the right balance between meeting the needs of the German consumer while ensuring sufficient tax revenue for the state,” Haijer added.