Bwin.party facing 15m VAT hit
Operator says it expects to pay approximately 15m following changes in how VAT is applied within EU member states
Bwin.party expects to pay approximately 15m in VAT during 2015 following recent changes made to how the levy on electronic services is applied within European Union member states, the company has said.
From 1 January, European-facing businesses have been forced to pay a levy based on the rules of the country in which their services are being consumed, as opposed to where the business is headquartered as was previously the case.
Bwin.party, based in VAT-free Gibraltar, will be hit hardest in France and Germany where its poker activities will be taxed at 20%, and both casino and poker will be hit with a 19% levy respectively. Germany contributed 26% of the group’s total revenues in H1 2014.
The large majority of EU member states apply a VAT exemption to gambling and gaming products, however countries such as Germany, France and Ireland have all decided to tax such activity to varying degrees, a decision which is being contested by a number of operators.
In its statement, bwin.party said while “substantial uncertainty remains” it expected to file for and pay VAT in “certain EU Member States”, and as a result 2015 total net revenue and cash flow will be reduced by approximately 15m before “any mitigating actions”.
A bwin.party spokesman said mitigation would depend upon “many variables” that at this stage “remain unknown” such as how the VAT will be applied and how the markets will change as a result.
“In regard to any legal challenge, we cannot be any clearer – we expect to file and pay VAT in the region of approximately 15m,” the spokesman said.
“Of course, should it transpire that such payments are in fact not payable then we may wish to review our position but for now we are clear on our approach,” he added.
Bwin.party’s share price was today down 3p at the time of writing to 103.4p.
While the financial cost of the VAT change will come as a blow to some firms, for a small number of others it is expected to usher in a more level playing field.
France-based Winamax, for instance, has long been subject to VAT on its poker activities at home and abroad in other EU states.