Denmark Online Gambling Tax Approved by EC

September 22, 2011 | News Category: Gaming Law

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After many months of waiting for a ruling from the European Commission, Denmark has finally been handed the decision regarding their proposed taxation scheme for online gambling sites that will be operated out of Denmark.

The European Commission deliberated on this issue for nine long months before handing down its decision before finally deciding that it would rule in favor of the proposal received from the government of Denmark. Some of the arguments that were looked at included the discrepancy of the amount that land based casinos and online casinos would be charged. The land based casino industry in Denmark felt that the proposed taxation was unfair to all land based gambling operations, and favored online the online casinos. Those who manufacture slot machines in Denmark also argued against the new taxation proposal.

The proposal for the new taxation in Denmark's Gaming Duties Act is to bring in a flat rate of 20% that will be collected on the gross gaming revenue (GGR). The reason for the particularly strong reactions from the land based casinos and slot machine manufacturers is because the current taxation for land based gambling runs between 45% and 71% gross gaming revenue tax.

In order to explain their decision, the European Commission released a statement to the press explaining the reason for this rather large tax discrepancy between the land based and online gaming operations. "This is because the positive effects of the liberalization of the sector outweigh potential distortions of competition."

On January 1st, 2012, the new online gambling law will officially take effect. Before this date, Denmark will already begin to offer online gambling licenses to those who qualify for them. The state owned monopoly, Danske Spil has not been entirely put aside, and will still hold the sole online gambling licenses for horse racing and for online bingo. Operators can apply for the other two kinds of licensing that will be available, one type of licensing for online sports betting and another for online casinos.

Clive Hawkswood, the Chief Executive Officer of the Remote Gambling Association (RGA) expressed a positive opinion about the EC decision. He noted that there were good reasons that justify the lower rate that at which online gambling will be taxed. He said: ""In essence, land-based operations compete within physical national boundaries, whereas online companies are part of a highly competitive international environment, and fiscal policy should be set accordingly."