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The EU General Court upheld the Danish gambling regime providing for a different tax treatment between online gaming and land based gaming putting an end to a long legal battle that had side effects also in other jurisdictions.
The online gaming dispute
The EU General Court ruled on State aid cases T-601/11 (Dansk Automat Brancheforening v Commission) and T-615/11 (Royal Scandinavian Casino Århus v Commission) against a European Commission decision of September 2011 regarding the Danish law on gambling.
The Danish gambling sector had been liberalised in 2010 establishing a 20% GGR tax for online gaming as opposed to the tax regime for land-based operators that must pay a tax of 41% of gross gaming revenues. Furthermore machines installed in restaurants and amusement arcades are subject to an additional tax of 30% on gross gaming revenues exceeding 30,000 Danish crowns (DKK) and DKK 250,000 respectively. At that time, the European Commission had found that this different tax regime was in line with EU state aid rules because the positive effects of the liberalisation of the sector outweigh potential distortions of competition brought about by the different tax treatment.
Royal Scandinavian Casino Arhus and Dansk Automat Brancheforening, an association of slot machine operators, brought actions for annulment of the Commission’s 2011 decision. The European General Court however dismissed both appeals, holding that the applicants lacked legal standing for bringing proceedings.
Consequences for taxation of online gaming in other jurisdictions
As happened in Denmark, a number of other jurisdictions provide for a different tax regime between online gaming and land based gambling and the competition between online and land-based gaming is the reason of the delay in the launch of online slots in countries that was faced in countries like Italy and Spain. However, cases like the one above helped to support the launch of online slots over 2 years ago in Italy and in the upcoming months in Spain.
Also, decisions like the one of the EU General Court on the taxation for online gaming discourage initiatives from the Parliament aimed at increasing the taxation for online gaming. And indeed just last week, the Italian Parliamente turned down a law proposal requesting a € 20 million increase in tax entries from the gaming sector.
We will see the developments of the matter in the next months. But for the time being if you want to discuss, as usual feel free to contact me, Giulio Coraggio. Also, if you want to receive my newsletter, please join my LinkedIn Group or my Facebook page. And follow me on Twitter, Google+ and become one of my friends on LinkedIn.
