Playtech faces Israel audit and Italy tax hike double whammy

Playtech has agreed to pay tax authorities in Israel €28m following an audit that investigated the supplier’s activities in the country between 2008 and 2017.

The London-listed firm said in a trading statement it would pay the €28m in the next 30 days, which would be included in its 2018 accounts as an exceptional item.

Playtech management said Israeli tax authorities had made “transfer pricing adjustments in relation to certain functions”, but that no penalties would be imposed on the company beyond the payment.

In November, Playtech reported it was on track to meet full-year earning guidance, but warned that headwinds in Asia that challenged the group in 2018 may continue.

To offset falling Asia revenues, Playtech expanded into regulated gambling markets last year after buying Italian retail betting outlet Snaitech for €846m.

But in late December, the government changed Italy’s gambling tax laws, which Playtech said would reduce adjusted EBITDA for 2019 by almost €25m.

Shares in Playtech fell 55% over 2018 and from 440p at the beginning of December to 370p on Christmas Eve, although it has since rebounded to 394p at the time of writing.