Operators to mount German VAT challenge

A number of operators are preparing to mount a legal challenge against Germany’s decision to apply value added tax (VAT) to gaming profits following recent changes to how the levy is applied across Europe.

eGaming Review understands the likes of bwin.party and GVC Holdings are among the companies to have instructed lawyers to build a case against the introduction of the tax after EU member states were instructed to apply the levy on a point of consumption basis from 1 January.

The change has seen Germany-facing egaming operators hit with a 19% tax on online casino and poker profits, although it is believed some operators will refuse to pay their bills until all legal avenues have been exhausted.

Should the challenge be unsuccessful, operators could face financial penalties for late payment.

Germany is one of a small number of EU nations to have applied VAT to egaming services following the recent recalculation. France has applied the levy to online poker however the vast majority of nations have made online gambling and gaming products exempt from the tax, in many cases due to existing gaming duties.

According to bwin.party’s H1 2014 results, Germany-based players contributed 26% of its total revenues so the prospect of a 19% tax on a proportion could set the operator back millions of Euros.

Meanwhile 888 chief executive Brian Mattingley previously told eGR the application of VAT in Germany could cost his firm “below double-digit millions”.

GVC Holdings, which operates Germany-facing CasinoClub, would also be liable for significant VAT payments.

When contacted, a spokesperson for bwin.party said the firm didn’t comment on its tax affairs while GVC was unavailable for comment.