EU rules in favour of differentiated Danish tax rate
Online operators will continue to pay less tax than land-based firm as EU General Court decides status quo does not violate state aid laws
The General Court of the European Union today delivered a landmark judgment which ruled Denmark could continue to set a differential tax regime for online and land-based operators.
The decision follows two cases brought to the Court by the Dansk Automat Brancheforening and the Royal Scandinavian Casino à rhus in 2011 which argued that online operators paying a lower tax rate violated EU State aid rules.
The country’s online gambling market, which opened in January 2012, taxes online operators at a GGR rate of 20% while land-based operators can be taxed by as much as 75%.
However, the Court ruled land-based operators were unaffected individually by the different rates, a decision which will enable the regulated online gambling sector to continue to set tax levels necessary to compete with the dot.com offer.
Secretary general of the European Gaming and Betting Association (EGBA), Maarten Haijer, said he welcomed the Court’s decision to recognise the need to channel players away from grey markets to regulated online gambling sites.
“With the unregulated offer just one click away on the internet, consumers will only play within the regulated environment if that offer is sufficiently attractive in terms of price and consumer experience,” he added.
“There are plenty examples of Member States where the regulated offer fails to attract consumers due to product restrictions and tax levels, resulting in those consumers being pushed outside the European regulatory umbrella, often to unregulated Asian offerings,” he added.
Clive Hawkswood, chief executive of the Remote Gaming Association, was also relieved by the decision and said it was important that tax regimes for online gambling were considered “within the context of international competition”.
“This ruling will undoubtedly help us make the case for workable and competitive licensing regimes as more and more EU Member States open and regulate their online gambling markets,” Hawkswood added.
The decision is set to have wider ramifications with the Netherlands also having proposed a dual tax rate for its online and land-based gaming regulation.
It had been feared that a ruling against Denmark’s tax regime would set a precedent to be used by Dutch politicians that have previously condemned proposals in the country’s gambling Bill.