German Parliament Approves New 5.3% Turnover Tax
Despite strong opposition from the gambling industry, Germany’s parliament, the Bundestag, has voted through a bill setting a 5.3% tax on online slots and poker bets.
The bill passed through a floor vote by the Finance Committee this week. It contains tax rates for online casino games that are set to become law across the country from July 1 according to the country’s new State Treaty on Gambling, the Glücksspielneuregulierungstaatsvetrag (GlüNeuRStv).
It means that taxes for online slots and poker will be 5.3% of turnover. The tax is intended to apply to both licensed and unlicensed gambling. The bill was supported by the governing coalition of the Christian Democratic Union (CDU), the Christian Social Union (CSU) and the Social Democratic Party (SPD), as well as the Green Party. However, Alternative für Deutschland (AfD) and the Free Democratic Party (FDP) opposed it, while Die Linke abstained.
While the bill may have passed in the Bundestag, it may still have to overcome some legal obstacles before becoming law. Both the European Gaming and Betting Association (EGBA) and Der Deutsche Sportwettenverband (DVSW) have filed complaints with the EU arguing that the tax is illegal state aid as it gives the land gambling industry an advantage.
According to the EGBA, while taxes vary between states, in Bavaria the difference in tax bills between land-based and online operations would be €293.9 million, with slot halls enjoying the biggest advantage of €178.1 million.
The tax has also prompted concerns about channelization in the market. A study conducted by Goldmedia consulting and research group for Entain (LON: ENT), Flutter Entertainment (LON: FLTR) and Greentube, found that the tax could result in as many as 49% of players turning to unlicensed operators.
The new state treaty (GlüNeuRStv) was approved in March 2020 and will be taking effect at the start of July. It legalizes online casino games in the country for the first time, but it also imposes strict limitations, such as a €1 per spin bet limit on online slots. Already major operators, such as LeoVegas (STO: LEO), have said that it has had a huge impact on revenues.