The European Gaming and Betting Association has submitted a formal state aid complaint to the European Commission in response to the German Bundesrat’s proposal to set a 5.3 per cent tax on online poker and slots stakes in the country.
This follows the association urging members of the German parliament to reconsider the proposed gambling tax measure last month, stating that tax at punitive rates would lead to more players using unlicensed websites.
The EGBA believes that the proposal breaches EU state aid rules because it would apply only to online operators, and would lead to online poker and slots stakes in Germany being taxed at rates four to five times higher than land-based gambling establishments.
“We have previously made our concerns about the tax proposal known to the German authorities but to no avail, and they will now need to justify the measure under EU law,” Maarten Haijer, secretary general of the EGBA, explained.
“We appreciate the efforts made in recent years towards introducing a new online gambling regulation in the country and recognise that an appropriate tax will need to be paid by online gambling operators.
“However, the rate of the proposed tax is punitively high and will distort market competition, and directly benefit Germany’s land-based gambling establishments over their online counterparts.
“We call on German politicians to rethink the proposed tax rate and bring it closer in line with the tax rate applied to online casino products in other EU countries.”
The EGBA, representing Europe’s leading online betting companies, has previously warned that the proposed online tax would result in a substantial and unfair tax advantage to Germany’s land-based gambling establishments.
In Bavaria, for example, it says that the tax measure would lead to online poker and slots stakes being taxed at rates four to five times higher than their equivalent in land-based casinos, and 15 times higher than slots offered in land-based amusement arcades, resulting in a tax advantage of €290m each year for the state’s land-based operators.
It believes that this constitutes an illegal state aid under EU law, and estimates that the extent of the illegal aid for land-based gambling establishments in Germany would be €741m each year should the measure be approved.