The high court of the European Union has given the Danish authorities the right to continue their current gambling tax regulation concerning online gambling. The current taxes for online operators in Denmark are lower than those for offline operators.
The decision was taken last Friday when the CJEU – Court of Justice of the European Union, approved the request of Denmark to continue taking only 20% in taxes from the gross revenue of online gambling websites.
Local offline casinos such as Royal Scandinavian Casino Arhux expressed their concerns that their business was negatively affected by it. Casino Arhus is one of the top ten casinos in the country. The taxes it must pay range from 45% to 75%, a much higher percentage than online websites.
This difference in the taxation of online and offline gambling businesses was initially launched in 2011. The land-based casinos raised their concerns that the bill is not equally treating all participants in the industry, which leads them to the conclusion that the government is illegally helping the online operators.
The government assured the casinos that despite their worries, the bill is helping the industry more than the ‘distortions of competition brought about by the measure’ are hurting it. The offline casinos were not satisfied and continued further by issuing a lawsuit.
The decision to continue taxing online operators with 20% taxes was justified by the fact that, online websites are in a straight competition with global competitors. The Court of Justice of the European Union explained that the two-tier tax is there to ensure that online gambling websites have the needed tools to meet their strong international rivals, a situation that the local brick and mortar casinos do not have to deal with.
The European Gaming and Betting Association – EGBA and the U.K. online bet exchange operator – Betfair both stood in defense of the Danish government, and the legal battles it is now undergoing due to the protesting offline casinos. Betfair has an online gambling license in Denmark as well.
The general secretary of the EGBA Mr. Haijer explained that he has been a witness to how many EU counties fail to lure more international customers to their online gambling sector. He stated that a major reason for that is the wrong gambling regulation.
Another EU country is considering to follow the example of the Danish authorities. Netherlands is currently working on the launch of its own regulations for an online gambling market, controlled by its government. The offline casinos in the country pay taxes of 29% and if the new ruling is accepted, it will demand online operators to pay 20% of its gross revenue in taxes. As in Denmark, the Dutch government faced opposition, this time by the Dutch Council of State, which argued that it was making an intolerant decision to treat two sectors of one industry with different regulations. The CJEU has stood behind the Dutch as well, offering its ‘legal powers’ if needed to resolve any doubts or concerns.
