German VAT battle gathers momentum
Around a dozen operators form a coalition in order overturn Germany's decision to apply VAT to gaming products
A coalition of approximately a dozen well-known European brands has been formed in an attempt to overturn a decision by German authorities to apply value added tax (VAT) to gaming products, eGaming Review has learned.
Germany-facing operators have been landed with a potential million Euro tax bill after VAT on electronic services was switched from point of supply to point of consumption on 1 January.
Member states have the sovereign right to apply an exemption to gambling-related products and while the large majority of states have applied the exemption, Germany, along with Ireland and France, has implemented the levy.
German law firm Hambach & Hambach has been appointed by the coalition to fight its corner and although partner Claus Hambach was unable to reveal the identities of the coalition members, he did confirm the case had been taken by the firm.
“We are working on a strategy to show decision makers that applying VAT on gambling as one of the few countries is not only inappropriate but also breaches EU law,” Hambach told eGR.
eGR previously reported that the likes of GVC and bwin.party were both believed to be planning a legal challenge following the implementation of the new tax.
And news of the coalition comes just a week after the European Commission published a paper on the issue of taxation in response to a number of enquiries from companies on the new VAT calculations.
While the Commission did not comment specifically on this particular case, it did say that states had the right to impose their own tax regime so long as the rules were consistent and upheld the rule of fiscal neutrality.
“There is a statement that Member States can apply different conditions and limitations to the application of the EU VAT betting exemption, subject to the principle of the fiscal neutrality,” Richard Woolich, tax partner at DLA Piper, told eGR.
“There is a call for individual Member States to provide clarity on the treatment in their jurisdiction in the hope that more certainty will avoid litigation,” he added.