Monday, December 5, 2022

Germany Protects Betting Shops from Local Taxation

Germany’s Federal Administrative Court in Leipzig, a supreme court for administration-related issues, has decided that municipalities will no longer be able to tax local betting shops. Until now, municipalities were able to levy various taxes.

Dortmund’s Municipality Imposed Unjust Taxes

The issue stems from a complaint from operators in Dortmund. Local gambling shops were discontent with a tax that the municipality introduced in 2014. The local authorities demanded a tax proportional to the size of each betting shop. Larger venues, therefore, had to pay higher taxes. The tax required bettors to pay more when playing with one of the municipality’s betting shops. Needless to say, shops didn’t welcome this tax and ended up launching a lawsuit.

Three years later, the Federal Administrative Court decided that municipalities can no longer impose a tax based on a shop’s area. Subsequently, the municipality introduced a new 3% stake tax on top of the existing 5% stake tax for sports wagers.

However, this led to another problem – according to Germany’s Lottery Act, businesses cannot be taxed with both municipal and federal taxes. Local sports betting shops appealed the taxes levied by the Dortmund municipality. However, the Constitutional Court eventually said that the tax was invalid, allowing the Dortmund case to continue. Now, the Federal Administrative Court has finally ruled that municipalities can no longer impose taxes.

Der Deutsche Sportwettenverband Is Happy with the Resolution

Mathias Dahms, president of Germany’s sports betting association, Der Deutsche Sportwettenverband, which challenged the legality of the tax in 2019, spoke about the court’s decision. He said that it is regrettable that shops have been taxed two times for so many years. However, he was glad to hear that the court has heard the sportsbooks’ pleas and has ruled in their favor. He concluded that he is happy to see the illegal taxes go.

Recently, Der Deutsche Sportwettenverband once again brought up the topic of illegal gambling in Germany. The association asked Germany’s new federal regulator, die Glücksspielbehörde, to take care of the matter urgently. According to estimates, there are over five hundred offshore brands whose products are available to German bettors. The association believes there are a total of 507 such brands although there might be more it hasn’t identified yet. Following the complaint, the new regulator asked internet service providers to block illegal sites.

Die Glücksspielbehörde already began work as a regulator but will not have full authority over gambling in Germany until the beginning of the next year.

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