EGBA claims “punitive” German turnover tax illegal under European law

The European Gaming and Betting Association (EGBA) claims that Germany’s proposed 5.3 percent online casino turnover tax would not only drive players to unlicensed operators but would also be illegal under EU law.

While Germany’s fourth state treaty on gambling, which permits online gambling, has been approved by all 16 states. It will take effect in July; tax rates have yet to be determined. The Federal Council (Bundesrat) has submitted a proposal to the Bundestag for final approval. Many expect it to grant the approval.

This proposal, which the EGBA described as “punitive,” would tax online slots and poker at 5.3% turnover.”

“Players outside of the regulated market would be unsafe from German consumer laws. This renders the proposed tax incompatible with the country’s new online gambling regulation’s primary goal,” it said.

Furthermore, it stated that the tax rate would violate European law by favoring the land-based sector over the online sector.

A member state cannot give an advantage to “specific companies or industry sectors, or companies located in specific regions” in a way that affects trade through interventions like tax rates, according to EU state aid rules.

“The proposed tax measure is punitive. It would result in online poker and slots taxing four to five times higher than their retail equivalents in land-based casinos. And also it would be 15 times higher than slots in land-based amusement arcades in Bavaria,” it said.

If the Bundesrat tax proposal is implemented, EGBA Secretary General Maarten Haijer said the organization would consider filing a complaint with the EU.

We urge the German parliament to reconsider the proposed punitive tax rate. It will encourage German players to use unregulated black-market websites, giving land-based operators a significant tax advantage, Haijer said.