EC probe demands Germany justify its online gambling tax regime

An intervention by the European Commission may force Germany’s Bundesrat (federal council) to delay its final vote on approving its proposed 5.3% tax charge on player stakes, to be enforced on online slots and poker verticals.

The controversial tax charge, remains the outstanding issue for Germany’s Bundesländer (state governments) to resolve in order for all provisions of the Fourth Interstate Treaty on Gambling (GlüNeuRStV) to be passed into law.

As stands, the tax charge faces a tight summer timetable, as the Länder must agree on the measure by 7 June, in order for the Bundestag (Parliament) to draft the legislation as federal condition of Germany’s overhauled Interstate Treaty which will come into force on 1 July.

However, German online gambling trade associations DSWV (sports betting) and DOCV (online casino) have submitted an ‘EC state aid compliant‘ against the Bundesrat tax charge.

The trade associations follow the European Betting and Gaming Association (EGBA) compliant that the Bundesrat had applied a ‘differentiated tax treatment’ for slots and poker – leading to favourable market conditions for Germany’s state-owned casino operators.

Recognising grievances, the EC will demand that the Bundesrat clarify how its tax charge differs from a state aid action that are prohibited under the European Union’s business frameworks.

The EC’s probe may force the Bundesrat to delay the vote on the tax charge by a further year, as following the summer recess Germany’s Länder prepare for critical federal state elections on 17 September.

Regardless of the tax charge’s pending outcome, the Bundestag maintains that Germany’s new online gambling regime will launch on 1 July – a position supported by the DSWV and DOCV in order to provide regulatory certainty for businesses.

The trade associations remarked that a year delay would allow licensed stakeholders to lobby for a fair solution on taxing online casino and poker verticals – in which new economic proposals have been issued to the Bundesrat to consider.

Q1 trading saw a number of European-listed operators cite German market complications, noting tough operational adjustments and heightened compliance costs servicing the Interstate Treaty’s provisional regime.

The EC had previously warned the Bundesrat to terminate the Treaty’s most restrictive player protection measures during the development stage of the GlüNeuRStV. Despite the objections, German lawmakers chose to maintain tough player protection directives, enforcing a €1,000 monthly deposit limit across all operators and a €1 stake limit on slots.