European online operators have been hit with large retrospective tax bills dating back to 2008 just two weeks before they were due to receive online gaming licences in Spain.
Bet365, PokerStars bwin, Sportingbet and Betfair, which have been paying taxes in Spain since last July under the Spanish Gaming Act passed last year, are among the companies now locked in discussions with the Spanish tax office over resolving the issue ahead of the 1 June licensing date confirmed last week by the Spanish regulator.
Earlier reports of sports betting leader Sportingbet facing a tax bill of €50m are however incorrect – Casino Choice understands the company’s potential liability is less than €20m – suggesting speculation over PokerStars having to settle a bill of €200m and bwin.party of €60m ahead of 1 June may also be wide of the mark.
The last-minute demands for back-dated tax from non-Spanish companies were unexpectedly imposed last week by a Conservative government faced with implementing unpopular austerity measures aimed at cutting the country’s budget deficit amid a tough economic climate. The Spanish unemployment rate hit 24% in the last quarter.
However, Spanish land-based operator Codere has long been lobbying government officials over what it cites as “illegal competition” from and non-payment of taxes by online operators. In late March, Sportingbet was forced to turn off its Spanish operations after the Mercantile Court of Madrid rejected Sportingbet’s appeal against a December ruling in favour of Codere, effectively cutting off the group’s earnings from its second largest market until its licensing status in the country had been confirmed.
Codere’s action against Betfair is due to be heard again on 1 June, the very same day the Spanish regulator is to issue the first online gambling licences. Head Spanish regulator Enrique Alejo has confirmed his organisation received between 55 and 60 licence applications to offer betting, poker, blackjack, roulette and baccarat in the territory, based on a tax rate of 20-25% of gross profit. Slots, bingo in-play betting have not yet been included in the regulation.
Bet365, PokerStars, Betfair, bwin, Ladbrokes, 888, William Hill and Paddy Power are among the pan-European operators known to have applied for permits in Spain.
