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European Commission Issues Ruling On Danish Tax

On Tuesday the European Commission ruled that online taxes that were levied by the Danish government do not interfere with European Union law.

A statement released by the European Commission, which acts as the legal enforcement arm for the European Union said:

"The Commission's decision establishes that the lower rate of taxation for online gambling indeed constitutes state aid but finds it compatible with EU rules, because the positive effects of the liberalisation of the market outweigh the distortions of competition brought about by the measure."

The case was brought before the commission after complaints were filed by the Danish Slot Machine Association saying that the lower tax rate that the Danish government had issued for online casino operators must be considered illegal state aid. The case has held up implementation of a regulated online gambling market in Denmark.

The European Gaming and Betting Association also commented on the ruling, giving a positive response on the ruling. The statement read, “We are satisfied that this investigation has led the European Commission to confirm that differentiated tax treatment for online and offline gambling activities is justified and is the result of distinct business environments. Online operators are subject to a much higher global competitive pressure than land-based providers. The business model of land-based operators is completely different as casinos in particular operate quasi local monopolies in their specific geographical market”.

Additionally, Sigrid Ligné who is Secretary General of the EGBA said, “Such differentiation proves also to be essential from a tax efficiency perspective. As confirmed by several econometric studies, the total amount of tax collected under a higher tax rate would eventually be lower than the total amount collected on the basis of a tax rate as provided for by the Danish Gambling Tax Act. Uncompetitive regulations based on excessive tax rates and disproportionate licensing requirements do not increase revenue but rather push consumption to the black market as shown recently in France.”

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