Legal

EGBA lodges EU state aid complaint over German igaming turnover tax

| By Robert Fletcher
The European Gaming and Betting Association (EGBA) has filed a formal state aid complaint with the European Commission in response to a proposal by the German Federal Council (Bundesrat) to set a 5.3% tax on online slots and poker stakes in the country, joining Deutsche Sportwettenverband (DSWV).
Goldmedia survey warns of 5.3% tax rate

The new proposal formed part of Germany’s fourth state treaty on gambling, which would permit online casinos to operate across the country. The treaty has been approved by all 16 states and is due to come into effect on 1 July.

The Bundesrat has sent a proposal to the legislature (Bundestag) for final approval, with this currently being examined by three different committees.

However, EGBA said that the proposal would provide a “substantial and unfair” tax advantage to land-based gambling venues in Germany.

EGBA gave the example that in Bavaria, the tax measure would lead to online poker and slots stakes being taxed up to five times higher than their equivalent in land-based casinos and rates 15 times higher than slots in land-based amusement arcades. This, the EGBA said, would result in a tax advantage of €290m (£250m/$353m) each year for the state’s land-based operators.

According to EGBA, this would constitute an illegal state aid under European Union law, with the organisation estimating that the extent of the illegal aid for land-based gambling establishments in Germany would be €741m each year should the measure be approved.

The association had previously hit out at the proposed measure, suggesting it would push players to unlicensed operators. The industry body said that the tax would lead to a failure to meet the treaty’s key objective: bringing players into the regulated market. 

The organisation cited a report from Goldmedia on behalf of Entain, Flutter Entertainment and Novomatic subsidiary Greentube, which said the tax rate could see 49% of players use unlicensed sites.

“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,” EGBA secretary general Maarten Haijer said.

“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. 

“We call on German politicians to rethink the proposed tax rate and bring it closer in line with the tax rate applied to online casino products in other EU countries.”

The EGBA’s complaint comes after German industry body Deutsche Sportwettenverband (DSWV) also filed an EU state aid complaint against the Bundesrat, arguing that proposed igaming tax rates offer an unfair advantage to land-based operators.

Yesterday (1 June), DSWV confirmed to iGB that it had filed a complaint with the European Commission, arguing that the tax rates should be classed as illegal state aid in a move that may delay implementation of the treaty.

Subscribe to the iGaming newsletter

Digitain NFL banner