Gambling Trade Body Takes Germany to Task Over Proposed Tax Hike

Tax Slot Machine GraphicGermany’s plan to implement a 5.3% tax increase on online slots and poker gameplay will be challenged by a prominent industry trade body.

The European Gaming and Betting Association (EGBA) will file a full complaint to the European Commission after claiming that ministers are handing land-based casinos in the country a ‘substantial and unfair’ competitive advantage.

Online casino firms in Germany are already subject to a VAT rate of 19% on their gross gaming revenue (GGR), whereas land-based operators only have to pay tax on GGR – there’s no corporation tax payments to account for.

The petition filed by EGBA will question whether Germany’s position on online gaming tax contravenes EU rules on fair competition and state aid. Based on the new rules, state aid for land-based casinos would total more than €700 million each year if approved, while a tax advantage of just shy of €300 million would see high street casinos potentially muscle online firms out of the industry.

Specifically in Bavaria, EGBA claims that online operators would have to pay five times more tax than their land-based rivals and 15 times more than slot brands in amusement arcades.

The upshot is that online gamers might be pushed towards offshore casinos and black market brands – anathema to the fourth state treaty’s stated mission of keeping German gamers in the regulated market.

The secretary general of EGBA, Maarten Haijer, said: “We have previously made our concerns about the tax proposal known to the German authorities but to no avail and they will now need to justify the measure under EU law.

“We appreciate the efforts made in recent years towards introducing a new online gambling regulation in the country, and recognise that an appropriate tax will need to be paid by online gambling operators.

“However, the rate of the proposed tax is punitively high and will distort market competition and directly benefit Germany’s land-based gambling establishments over their online counterparts. “

What are the Gambling Tax Laws in Germany?

Reichstag Berlin

Back in March 2020, German authorities agreed new rules that would legalise online casinos and pokers sites from July 2021.

This fourth state treaty was approved by each of the 16 individual governing states of Germany, passed state parliament ratification and was packed off to the European Commission for approval.

A new federal regulator would also be introduced as Germany truly embraces online casino gambling for the first time.

But opposition is mounting. As well as the EGBA petition being filed with the European Commission, Germany’s own gambling industry body – Deutsche Sportwettenverband (DSWV) – has also filed a complaint based on the same EU state aid infringements.

And a survey conducted by Goldmedia and published in German on their website reveals that as many as 49% of players could use unregulated online casinos if the tax situation impacts their profitability. That would take tax revenue away from the country’s coffers, while leaving gamers in Germany exposed to the risks of black market betting.