TAX NEWS - June 2010

Danish Tax: Taxation of online gambling operators

Last week's new liberalising laws for Danish gambling, passed unanimously June 4 by the Folketinget (parliament) will have to go back to the European Commission for further consideration following complaints from land-based gambling companies that the tax provisions regarding online gambling are unfair.
 
The law, which was originally designed to come into force in January 2011, will permit the licensing and taxation of online gambling operators. It has since been amended to instead give Denmark's taxation minister the power to set a new date pending a response from the EC.
 
The news comes on the heels of reports that the former state online gambling monopoly Danske Spil will have to abandon its online poker b2b deal with Party Gaming following a complaint regarding tender procedures from Playtech plc . Party Gaming has since indicated that it is prepared to re-tender on the deal.
 
"The land-based operators say this [tax provision] could be a state aid problem," said a spokesman for the Danish tax authorities. "We don't agree but to be sure we will notify the European Commission."
 
Danish tax requirements under the new law would see [land] slot machine and casino revenues taxed at rates ranging between 45 and 75 percent. But the proposed tax rate for internet gambling of 20 percent will give the online gambling operators an unfair advantage, claim Danish land operators.
 
Denmark's six terrestrial casinos are privately operated, along with legal slot machine gaming in bars, restaurants and amusement arcades.
 
"We think it is illegal for the government to support internet gambling in this way," said Gunnar Sorensen, director of the Danish Gaming Association (DAB). "If two gambling companies do not have the same tax treatment, then the Danish government is effectively supporting the online gambling companies."
 
"These online operators have acted illegally in Denmark for many years and now they are getting a big reward for that by paying one-third of the tax that the land-based companies are paying," complained another supporter of the land operators.