BFH confirms: Betting tax also applies to EU providers

The German betting tax provides plenty of material for discussion and is always a key issue for both bettors and bookmakers. The bookies are reluctant to pay it and the players can't stand having it imposed on them by the providers, with their winnings dwindling. A recent ruling by the Federal Fiscal Court (BFH) confirms the current legal situation: the tax on sports betting levied by bookmakers without a German licence is compatible with the German constitution and European law.

In a landmark judgement, the BFH has confirmed that the German betting tax also applies to providers from the EU. This applies in particular to bookmakers that are licensed abroad but provide sports betting for German customers. The decision is once again likely to cause considerable debate, as tax liability has been a sensitive issue for years.

The BFH has now clarified that the tax on sports betting does not violate either the German constitution or European law. The level of the tax is moderate and the applicable provisions do not discriminate against any companies in the provision of their services - whether domestic or foreign.

The case in detail: Betting provider from another EU country takes legal action against betting tax in Germany

The starting point of the current judgement was several years ago. An EU betting provider that also offered its services in Germany had taken legal action against the levying of German betting tax. This was based on a complaint filed in 2016, in which the bookmaker argued that the levying of a five per cent tax on the betting stake, which applies to German players, was a violation of the European freedom to provide services.

The company was of the opinion that the administrative effort involved in identifying German players and calculating the tax was disproportionate. Furthermore, the provisions were unfair, as (stationary) providers operating in Germany were also subject to the tax, but were often more familiar with the local regulations.

It is interesting to note that although the judgement relates to the legal situation in 2016, it is also applicable to today's laws. The basic provisions, in particular the five per cent tax on bets, remained unchanged following the amendment of the Interstate Gambling Treaty in 2021.

The ruling makes it clear once again that illegal providers operating without a German licence are also subject to tax.

Ongoing debates as to whether EU law cancels out German jurisdiction

The question of the extent to which EU law influences or even overrides the national regulations of the member states regularly causes heated discussions, particularly in the area of gambling. One of the central issues here is the freedom to provide services, which should enable companies to offer their services throughout the EU without restrictions. However, this leads to conflicts in the gambling sector in particular, as many countries, including Germany, have their own regulations to control the market and curb social risks - especially gambling addiction.

In principle, the EU stipulates that service providers licensed in one member state may also provide their services in other EU countries. In practice, however, there are always tensions between this freedom to provide services and national laws. In Germany, for example, there are strict regulations for games of chance, the essence of which is that only companies with a German licence may provide their services in the country.

In addition to the licence, the betting tax and the question of whether it also applies to foreign providers are a recurring focus of debate. Opponents of the tax argue that Germany is hindering free competition through the strict application of its laws and is therefore in breach of EU law. Supporters, on the other hand, argue that protecting players and curbing gambling addiction must take higher priority than economic interests.

However, the BFH's decision once again makes it clear that the German regulations, including the betting tax, are in line with European law. It remains to be seen whether future judgements will concern similar situations and whether other EU providers will defend themselves against German taxation. However, it is clear that the dispute over the interplay between national law and EU regulations in the gambling sector is far from over.

Conclusion

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