German Court Throws Out Local Tax On Bookmaker Shops

September 21, 2022
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​​​​​​​Germany’s highest administrative court has ruled that municipalities may not levy an additional betting tax on retail shops, in a victory for bookmakers including Tipico, Tipwin and Playtech’s HappyBet.

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Germany’s highest administrative court has ruled that municipalities may not levy an additional betting tax on retail shops, in a victory for bookmakers including Tipico, Tipwin and Playtech’s HappyBet.

The court, sitting in Leipzig, ruled on Tuesday (September 20) that the municipal tax is too similar to a federally imposed 5 percent tax on sports-betting stakes.

Hundreds of German municipalities had levied an extra tax of 1 to 3 percent, which meant land-based betting shops were paying as much as 8 percent on stakes.

The Federal Administrative Court ruled against the city of Dortmund, which has levied such a tax since 2014.

Taxes applied to racing and sports betting through the federal Lottery Act supersede imposition of a local tax on the same item, the court said in a press release.

Retail bookmakers have been fighting the locally imposed tax for years, calling it “existence threatening”.

In 2017, the Leipzig court said that municipalities should not base a local tax on the size of betting shops, leading Dortmund and others to set betting stakes as the basis for the tax.

Mathias Dahms, president of the German Sports Betting Association (DSWV), applauded the ruling.

“Many betting agencies have been wrongly taxed twice for many years, although we have pointed out the illegality of the additional municipal betting shop tax from the start. Now the years-long struggle through the authorities has finally been won."

DSWV said some of the plaintiffs in the case were members of its industry trade group and it commissioned a study in 2019 which argued that the municipal taxes were too similar to the federal tax to be constitutional.

That study was done by Professor Gregor Kirchhof, director of the institute for business and tax law at the University of Augsburg.

The extra tax is especially popular in North Rhine-Westphalia, Hesse and Baden-Württemberg, and Cologne was preparing to impose such a tax, executives said.

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