Today, Dutch media reported that the proposed Remote Gambling Act (“RGA”) is subject to a complaint filed with the European Commission. The sector organization of slot machines, VAN, submitted the complaint stating that unlawful state aid is involved in the differentiation of gambling taxes.
Under the RGA, a tax rate of 20% has been proposed for legal remote games of chance. For land based games of chance, the tax rate will continue to be 29%. VAN holds the opinion that unlawful state aid to remote gambling operators is involved, now that “same products should be taxed equally”.
According to the Dutch government, this lower tax rate for remote operators must further strengthen their position and must contribute to achieve the highest degree of channeling as possible. Increasing the rate for remote gambling will have large negative consequences for the desired channeling degree, now that this will increase the risk that Dutch players massively turn to (more attractive) illegal sites. Moreover, if the tax rate for land based gambling operators is reduced to 20%, the state treasury will miss out on millions of tax revenues.
If the Commission determines that unlawful state aid is involved, the beneficiaries (i.e. remote gambling operators) could potentially be put in an awkward situation whereby millions of additional taxes have to be paid. Another consequence could be that the RGA will be declared invalid, meaning that the wished-for liberalization of the Dutch remote gambling market would be off.
The Dutch State Secretary of Justice is confident about the complaints procedure, now that various complaints against similar tax regulations of other EU Member States were lodged in the past in which the state aid involved was not considered unlawful. For example, with respect to the Danish gaming tax regime, the Commission concluded that lower tax rates for remote gambling indeed constituted state aid for remote gambling operators, but was nevertheless compatible with the internal market.