Lottoland to file new appeal in German VAT case for €10m

Lottoland will be appealing a Maltese court ruling requiring the firm to pay more than €10m (£8.6m) in VAT on its operations with Germany.

The case centers around a claim by the German tax authority that the supply of lottery bets is an electronic service and therefore Lottoland is required to pay VAT on all lottery betting services provided to German customers.

The German authorities have stated that tax incentives should not apply and therefore VAT should be charged on all bids placed on the German Lottoland website between July and December 2018.

The Lottoland business in Gibraltar has been registered in Germany for VAT purposes since January 2018. In July 2019, the German tax authorities in Berlin-Neukölln sent the firm a notice to enforce unpaid VAT amounts.

The region's authorities asked Lottoland to provide a security deposit of 8 million euros as a guarantee of payment, which the operator later appealed in two separate cases after legal advice.

In both cases, Lottoland argued that the German tax authorities should delay making a decision until the taxes levied have been fully calculated and not pay a security deposit.

Lottoland Gibraltar then received notification that a charge of €8.7m (excluding fines) or €9.7m plus fines had been filed against it in June 2020. In August of the same year, the firm again filed an appeal against the enforcement charge, arguing that the decision had not been made. was done on his previous appeals.

The issue of VAT on the lottery in Germany has also been challenged by Lottoland's former competitor and lottery brokerage business Zeal, which won an appeal at the Hannover Fiscal Court in November 2019 against the authorities in a similar lawsuit.

Using the EU directive on mutual assistance for the refund of taxes and duties in various member states, the German authorities engaged the Maltese tax commissioner, who in January filed a separate proceeding in the First Chamber of the Civil Court of Malta against the Maltese business of Lottoland.

In response, lawyers acting on Lottoland's behalf argued that the case was unenforceable and was brought against the wrong operating entity, before providing supporting evidence of the Berlin-Neukölln authorities' VAT assessment against the Gibraltar business, not the Malta business.

However, the presiding judge ruled that since Lottoland Malta was a business in Malta, the Malta Tax Commissioner was entitled to recover the total amount of VAT due on behalf of the German authorities.

In addition, the judge cited the foresight of the EU directive, which gives the Maltese authorities the ability to collect outstanding money as if it were a civil debt to the Maltese government.

In a statement provided EGR , Lottoland CEO Nigel Birrell said: “Lottoland will be appealing against the April 24, 2021 decision on the basis that the case was initiated by the Berlin-Neukölln tax office against the wrong company in the wrong jurisdiction. concerning the calculation of VAT, which has no basis.

“Furthermore, Lottoland Limited Malta was not registered until January 24, 2019, which was after the period to which the disputed VAT assessment relates, from July to December 2018,” Birrell added.

Lottoland now has until May 12 to register its appeal with the Maltese courts.