The European Union Court of Justice is currently hearing a case that might impact online gamers across the globe. Traditional Nordic-based casino in Aarhus, Denmark, The Royal Scandinavian is against the idea of physical casinos being subject to higher taxes than virtual or web-based operators.
The popular casino has stated that internet casino providers are given special incentive to start new licensed ventures with benefits of considerably lowered tax rates. This practice is claimed unfair as the difference works against free trade laws set up in the European Union.
Even though the case is being heard in Denmark, the resulting decision is bound to impact online casino operators across Europe. Web-based gaming portals based in the Netherlands and Portugal look to suffer consequences of the case as different tax regulations are to be put into effect for online and traditional brick and mortar casinos as well.
History behind the fight
2012 saw the government in Denmark begin to enforce and regulate the many online gaming providers after the state was brought to Court in Europe. Since then, regulations have opened the online gaming sector to companies across the world, allowing the operators to provide illegal services to legitimise their business.
Before 2012, online gambling site operators offering keno, bingo and arcade games weren’t required to maintain and control servers in Denmark. Apart from establishing a mandatory office that complied with Danish tax laws on internet gambling and submission of the annual fee to renew licenses, operators were not bothered by any further regulations. The tax includes 20 percent levy on overall gross revenue earned by gaming portals as well as 20 percent corporation or entity tax.
This new tax rate was set as EU discovered that physical casinos paid a much higher tax rates, however, the regulatory authority in Denmark was able to persuade EU tax commissioners that online and brick and mortar casinos are two separate operations.
If the Court of Justice rules in favour of brick and mortar casinos, the ruling will inadvertently have an impact on gaming bill soon to be passed in Portugal. Web-based operators in Netherlands could also stand to suffer as tax rates might be increased from 20 percent, as brick and mortar casinos are subject to 29 percent tax.