As part of its gambling reforms, Germany’s Bundesrat has recently issued a proposal to tax online poker and slots stakes at a rather punitive rate. However, the European Gaming and Betting Association (EGBA) has warned that the proposal which, if passed, would subject online poker and online slots stakes to a 5.3 percent tax might have some negative impacts. Germany has been working on ways of directing its citizens to licensed and regulated operators within the country. However, the proposal is likely to undermine these objectives in more than one way.
To begin with, the proposed tax measure will impinge on the competitiveness of the licensed and regulated iGaming market. This, according to a recent player survey published by Goldmedia on behalf of key iGaming operators, could see nearly half of the country’s online gamer shift to unlicensed and unregulated online casinos. Naturally, there are lots of risks involved if that happens especially because the players will no longer be protected by the country’s consumer laws.
Breach of EU Law
The EGBA has further pointed out that there will be even more profound legal implications should the proposed turnover tax be approved. As it turns out, the measure is punitive and would result in the provision of a substantial and unfair tax advantage to Germany’s land-based gambling venues while putting the online operators at a significant disadvantage.
To put this into perspective, the tax advantage that the brick-and-mortar casino operators would be getting could be in the tunes of hundreds of millions across various states. This, according to the EGBA constitutes and illegal state aid as defined by EU laws.
What Next?
EGBA has already raised its concerns regarding Germany’s proposed tax measure with the European Commission. On the same note, the association is urging the country’s parliament to at least reconsider the proposed tax measure when it is debated in the Bundestag in the coming weeks. Ideally, the German parliament should consider tax rates that are more closely aligned to those imposed by other EU member states. This would ensure that many German players are still able to benefit from the protection of German consumer laws which was the core objective of the gaming reforms in the first place.
“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.”
Maarten Haijer, Secretary General, EGBA.
In any case, the proposed tax measure ends up being passed, the EGBA has states that it is open to all options. One of the possible actions it will take will be filing a formal state aid complaint with the European Commission.
