German Court Says Sports-Betting Tax Is Not Unconstitutional

October 22, 2021
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Germany’s Federal Fiscal Court has ruled that the country’s hefty online sports-betting tax rate is not “suffocating” and does not violate German or European law.

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Germany’s Federal Fiscal Court (Bundesfinanzhof) has ruled that the country’s hefty online sports-betting tax rate is not “suffocating” and does not violate German or European law.

The current 5 percent tax on betting stakes, which has been in place since 2012, is not unconstitutional and is “moderate” enough not to suffocate or strangle business, the court said.

The ruling was delivered on May 17 but was only announced on Thursday (October 21). The plaintiff, who was not named, is a company which had a licence from another European Union country and was appealing an April 2018 ruling of Hessian Finance Court, the higher court said.

The federal government also has a “legislative competence” to be able to levy taxes on companies, the court said.

The court found no encroachment on EU right to freedom of services because it said domestic and foreign operators are assessed equally.

The ruling was not unexpected because the court had earlier weighed in on a similar case involving racing bets, said attorney Claus Hambach of Hambach & Hambach.

But Hambach said it is “important to state” that the ruling does not address the controversial new 5.3 percent tax on stakes for online slots and poker, a tax which took effect on July 1 under amendments to the original 2012 state treaty.

The European Gaming and Betting Association and the German Sports Betting Association (DSWV) have filed separate complaints to the European Commission claiming that the online slots and poker tax amounts to unfair state aid to land-based operators, who have different tax systems.

DSWV managing director Luka Andric also said that the finance court’s ruling has no impact on the trade group’s state aid complaint, which is based on what it claims are the “discriminatory rules” in the new tax regime.

The plaintiff could also appeal the finance court case to Constitutional Court, he said.

Separately, the finance ministry has released online slots and poker tax receipts for the first time since the new online tax took effect.

Online slots tax take was €28.3m in September and €32.7m for the third quarter. The September figure suggests online slots turnover of about €534m for that month.

Online poker tax receipts were €3.9m for the third quarter, according to the ministry.

Prior to July 1, online slots and poker operators only paid 19 percent VAT.

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