German turnover tax gets Bundesrat green light

Germany’s Bundesrat has approved a 5.3% turnover tax on online slots and poker which now looks sure to be introduced when the regulated market begins on 1 July.

In a vote on 23 June, parties including the Christian Democratic Union (CDU), Christian Social Union (CSU), Social Democratic Party and the German Green Party voted in favour of the tax.

Only Alternative für Deutschland (AfD) and the Free Democratic Party (FDP) voted against the bill, with Die Linke (The Left) abstaining.

The bill amends Germany’s Race Betting and Lottery Act to include the 5.3% turnover tax, which will apply to licensed operators and those deemed to be operating in Germany illegally.

Ostensibly, the tax aims to reduce the German black market through this application.

Legislation had previously been reviewed by the Bundesrat’s financial committee, where several amendments were tabled by industry stakeholders and legislators alike, but these were ultimately dismissed.

The committee approved the tax in its current guise, leading to yesterday’s parliamentary vote.

Discussing the tax and its wider implications for operators, B90 Holdings COO Rainer Lauffs said: “With all the restrictions now combined in the legislation together with this tax rate, I just cannot imagine how regular operators could make any money there.

“It is especially sad because the vast majority of the big operators, who would have been able to spend enough marketing money to channel the gaming demand towards the regulated offerings, could have made it very difficult for the black market to flourish.

“As we all know, the demand for online casino games is there and is large, and it obviously will find its way to get satisfied. “Unfortunately, this will happen elsewhere outside of German influence.

“So sad that politicians do not seem to be able to learn from poor examples in other countries, but that is where we are now,” Lauffs added.

The bill will now be passed to the European Commission (EC) for review, which will involve assessing the legislation to see if any part of it conflicts with wider European Union (EU) law.

If it does, the EC can send the bill back and ask for additional amendments to be made.

Another obstacle for the bill’s ratification are complaints registered with the EC by the European Gaming and Betting Association (EGBA), which has said the tax contravenes EU rules by favouring land-based casinos over their online counterparts.

This tax, the EGBA claims, would see online poker and slots stakes being taxed at a rate of four to five times higher than land-based firms, rising to 15 times higher when comparing online slots to those found in amusement arcades.

Using the example of the Bavarian market, the trade body suggested the tax, if implemented, would result in a tax advantage of €290m (£251m) annually for the state’s land-based operators.

German trade body Der Deutsche Sportwettenverband (DSVW) also filed a complaint with the EC on similar grounds in May.