Landmark Danish taxation ruling set for this month
European Court of Justice set to decide on the legality of differing tax rates for online and land-based operators
Danish authorities are set to learn whether it can continue to tax online and land-based operators at different rates as the European Court of Justice (ECJ) prepares to deliver a judgment which could have wider implications for the European gambling industry.
Denmark’s Royal Scandinavian Casino filed a complaint to the ECJ in December 2011 in which it challenged the European Commission’s decision to back a lower rate of taxation for online operators.
The country’s online gambling market opened in January 2012 amid arguments led by the land-based sector that the differing tax rate on GGR of 20% for online and up to as much as 75% for land-based operators constituted illegal state aid.
The ECJ is set to make its judgment on 26 September with the ruling expected to set a precedent which could then be used within other European online gambling jurisdictions in the future.
“An ECJ decision in favour of the Royal Scandinavian Casino could potentially have a larger impact on most gambling markets in Europe, as it is indeed the norm rather than the exception that there is a different tax rate for land-based operations than for online,” Henrik Norsk Hoffmann, a Danish gambling lawyer, told eGaming Review.
“The Commission’s original decision wanted it to have low implications for the rest of the EU so it ruled that online and land-based gambling is the same market but that state aid is justified in the specific case of Denmark,” he added.
The Danish Gambling Authority (DGA) and online operators have since argued that online and land-based gambling are two different markets and should be subject to different tax rates.
A second argument from the DGA, backed by the European Commission, is that even if it’s one market, the state aid is justified for online operators to receive a licence and reduce the size of grey and black markets.