Thursday, June 3rd, 2021 | Written by Renee
Germany will have to justify its new online gambling tax proposal to the European Commission after a leading industry body officially filed a formal state aid complaint against the country over its new tax laws.
The European Gaming and Betting Association (EGBA), which represents Europe’s major online gambling operators, made the move after the German Bundesrat decided to push through a new measure which would see online poker operators being taxed at punitively high rates. This despite an earlier warning from the industry that the new proposal would negatively impact the country’s regulated online gambling market.
New Tax Laws Violate EU State Aid Rules
Starting July 1, the new 5.3% rollover tax on online poker will officially take effect, following approval from all 16 German states. The EGBA claims that the new measure is in clear breach of EU state aid rules, in that it would give land-based operators an unfair advantage.
According to the EGBA, the new rollover tax would allow Germany’s brick-and-mortar gambling companies to enjoy a €290 million tax advantage every year, leading to an estimated €741 million in illegal aid for land-based casinos annually.
The extreme rates would make it impossible for some online gambling operators to thrive, as that would actually exceed their gross gaming revenue (GGR). The EGBA cites the state of Bavaria as an example. The industry body said that the new rollover tax on online poker and slots would be 4-5 times higher than the 25-30% GGR-based tax rate imposed by the state on its land-based operators.
Germany’s Online Gambling Regulatory Struggles Continue
Germany has for a long time struggled to create an appropriate online gambling tax regime that would fall in line with EU laws and would not result in a dispute with the online gambling industry. Back in 2015, the German government also clashed with online operators over its complicated laws on online gambling, which resulted in the creation of a new group, the German Association of Telecommunications and Media (DVTM), of which PokerStars was a member.
Now, the German government and the country’s online gambling industry are at odds once again, and it’s still unclear whether both would finally be able to reach a compromise.
Impact on Online Poker Operators
If the country continues with its tax plans, online poker operators would have no choice but to pull out of the market, as such extreme rates would significantly impact their operations.
One operator has already hinted at leaving the country if issues regarding the new tax measure aren’t resolved. Unibet, which is part of online gambling giant Kindred Group, last month announced a partial withdrawal from Germany.
In an email sent to its German players, Unibet said it would no longer be running cash games and sit-n-gos starting July 1, the same day that the new tax laws will take effect. The operator is also suspending its loyalty program.
The company cited Germany’s new tax proposal as its main reason for the move. The operator also said that their decision is still subject to change, depending on any latest developments in relation to the country’s new tax regime.
For the time being, Unibet won’t be closing any German accounts, and players are still allowed to access its remaining offerings, including multi-table tournaments and their famous jackpot tournament variant Hexapros. The operator could leave the country altogether if the new tax proposal pushes through.
The EGBA claims that Germany’s new tax rules would only push players to unregulated sites, a direct contrast to what German officials wanted to achieve for the country’s regulated market. The group is urging legislators to rethink their new tax measure and look towards other countries in the EU implementing reasonable tax rates on online operators.
The EGBA is among prominent online gambling organizations in the EU. Six major European online gambling companies are currently associated with the group, namely, Betsson Group, Bet365, William Hill, BOS.nu, Kindred Group, and Entain (the parent company of partypoker).