German online casino tax moves one step closer with committee approval
Bundestag Finance Committee accepts 5.3% turnover tax as politicians hail potential impact on unlicensed gambling
German-facing online casino operators will be forced to comply with a 5.3% tax on turnover after the Bundestag Finance Committee approved the passage of a bill introducing the tax to a full parliamentary vote.
The bill amends Germany’s Race Betting and Lottery Act to include the 5.3% turnover tax, which applies to online casino, virtual slots and online poker.
The approval will now see the bill passed to the formal legislator process, which includes a second and third parliamentary reading, scheduled to take place later this month.
Antje Tillman, a spokesperson for the ruling CDU/CSU party, hailed the implementation of the tax as a necessary step on the path to legalising the online casino vertical, which has previously been illegal in Germany.
“Uniform taxation regulations form the basis for legalisation,” Tillman explained.
“With today’s law we have passed a Germany-wide uniform regulation for the taxation of online games of chance such as virtual slot machine games and online poker.
“This means that online games of chance are taxed at 5.3% of the stakes made. Even if this game of chance is operated illegally, for example because there is no licence, taxation takes place.
“With this legislative resolution, the goals of the State Treaty on Gambling are implemented.
“On the one hand, the Race Betting & Lottery Act serves to bring previously illegal gaming offers into legality. On the other hand, it combats gambling addiction and other negative phenomena of real and virtual gaming,” Tillman concluded.
This opinion, however, is not shared by the European Gaming and Betting Association (EGBA) which said in May that the implementation of the tax could shrink German online casino channelisation to as low as 51%.
Criticising what it called the “punitive and unfair” taxation proposals, the EGBA suggested the tax would result in online operators being taxed at rates of between four and five times higher than their counterparts and competitors in the land-based sector.
This rises to a disparity of 15 times for online slots operators in comparison to retail slots.
Earlier this month, the EGBA filed a formal complaint with the European Commission (EC) over the tax on the grounds it violates European Union state-aid rules.
Under EU rules, it is illegal for member states to give financial help to some companies and not others in a way which distorts fair competition.
If the EC finds that rules have been violated, it has the option to start a ‘recovery case’ to remove the undue advantage granted to a company (or companies) and to restore the market to its state before the aforementioned aid was granted.
There is a limitation period of 10 years for recovery.