Tuesday September 20, 2011 : Lower tax on internet gambling is acceptable, says EC
The enforcement arm of the European Union, the European Commission, approved Tuesday the new Danish online gambling taxes drafted as part of a law liberalising gambling.
The Commission said in a statement that following an in-depth investigation it had found that the law lifting some restrictions on gambling in Denmark, which also allowed for lower taxes for online casinos than for land operations, complied with EU state aid rules.
"The Commission's decision establishes that the lower rate of taxation for online gambling indeed constitutes state aid but finds it compatible with EU rules, because the positive effects of the liberalisation of the market outweigh the distortions of competition brought about by the measure," said a statement from the Commission, which acts as enforcer and trade regulator in the 27-member European Union.
The EC decision hopefully brings to an end a dispute that has lasted for a year and delayed the implementation of an online gambling regulatory regime in the Nordic country.
Complaints filed mid-2010 by the Danish Slot Machine Association and by one of the terrestrial casinos claimed that the lower tax rate set for online casino operators in the context of the opening of the Danish gaming market had to be considered an illegal State aid.
The European Gaming and Betting Association, a trade group supported by most large European internet gambling groups, commented on the EC decision, saying:
“We are satisfied that this investigation has led the European Commission to confirm that differentiated tax treatment for online and offline gambling activities is justified and is the result of distinct business environments. Online operators are subject to a much higher global competitive pressure than land-based providers. The business model of land-based operators is completely different as casinos in particular operate quasi local monopolies in their specific geographical market”.
Secretary General of EGBA, Sigrid Ligné, added: “Such differentiation proves also to be essential from a tax efficiency perspective. As confirmed by several econometric studies, the total amount of tax collected under a higher tax rate would eventually be lower than the total amount collected on the basis of a tax rate as provided for by the Danish Gambling Tax Act. Uncompetitive regulations based on excessive tax rates and disproportionate licensing requirements do not increase revenue but rather push consumption to the black market as shown recently in France.”