The European Gambling and Betting Association (EGBA) has announced a 5.3% turnover tax on German online poker, and slot machines could cut entry into the regulated market to 51%.
The trade organization cited data from a recent survey by Goldmedia, according to which up to 49% of German slot machines and poker players would go into the unregulated sector if the tax were imposed by the German Bundesrat.
“Gamblers outside the regulated market will not be protected by German consumer protection laws, making the proposed tax inconsistent with the key objective of the country’s new online gambling regulation due to take effect on July 1, 2021,” it says. in the EGBA message.
The trade body has criticized "punitive and unfair" tax proposals that it claims would result in online operators being taxed at rates four to five times higher than their land-based counterparts and competitors.
This increases 15 times for online slot operators compared to retail ones.
“This will provide German landline operators with a significant and unfair tax advantage over their online counterparts,” the trade body wrote. "EGBA considers that this would constitute illegal state aid under EU law."
The EGBA highlighted the example of Goldmedia with the Bavarian market, where tax benefits reach 290m euros (£251m).
Requesting a review of tax proposals with a view to introducing alternative tax rates in line with other EU member states, the EGBA said lower taxes would ensure the success of the country's regulated market.
The trade body said it would "look into all options" if the tax rate is approved, including filing a formal complaint about state aid with the European Commission (EC).
In previous cases involving the Danish market, the EU has ruled that the different tax treatment between online and land based operators qualifies as state aid under EU law.
“We welcome the regulation of the German online gambling market and are fully aware of the need to pay tax on online gambling,” said EGBA Secretary General Maarten Hayer.
“However, we are calling on the German parliament to reconsider the proposed punitive tax rate because it would encourage German players to use unsecured and unregulated black market websites and give ground operators a huge tax advantage.
“We are ready to share our experience in other EU jurisdictions and strongly believe that it is possible to set a level of taxation that strikes the right balance between meeting the needs of the German consumer and ensuring sufficient tax revenues for the state,” Haijer added.
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