The plan puts forward the idea of a single online gambling tax that would be equally shared between all the European Union member states.
Belgium. Victor Negrescu, Vice President of the European Parliament, supports the idea of introducing a single online gambling tax across the whole European Union market. He believes that an EU wide iGaming levy might be an excellent way to raise the financial resources of the union without increasing the pressure on national budgets.
The plan would impose a fixed charge on the online betting and gaming companies which would be used by the EU to finance its priorities such as education and youth programs. Negrescu stresses that even a 1 percent EU levy could generate tens of billions of euros for the EU budget.
He said:
Today, the online gambling market is one of the fastest growing digital industries, generating dozens of billions of euros, yet the significant share of these profits escapes fair taxation. My proposal is simple and responsible – a European levy on the online gambling and betting industry, applied equally to the already existing national turnover taxes, while fighting for a clear EU directive against illegal unlicensed platforms. A coordinated EU-level tax would enable us to find a solution for the lack of EU resources by providing dedicated funding for education, skills, prevention, addiction treatment and mental health.
While VAT is only partly harmonized at the EU level, gambling taxes remain the exclusive domain of the member states. Therefore, there is a great deal of variation across the national systems of the Union. At the moment, the tax rates on gross gambling revenue vary from approximately 5 percent to 40 percent.
Several EU countries such as France and Sweden have increased their gambling taxes in recent years. On the contrary, Estonia has taken a different path, and after a mishap when the government completely removed the gambling tax for this year, it passed a law cutting the gambling tax.
Proponents of the system say that the big differences in national tax rates cause problems for the internal market and that operators, therefore, are being pushed towards lower tax jurisdictions. However, Negrescu is of the opinion that the EU budget is not sufficient to finance current and future policy requirements, especially in the areas of education and workforce skills.
During the discussions in Parliament, internal figures were referred to stating that the online betting and gambling sector made about 130bn in 2022, and the revenues might be coming close to 200bn now with the sector expanding rapidly.
Outlook for an EU iGaming tax
So far, there is no official draft proposal and it is rather doubtful that an EU iGaming tax, how it would be deducted from national duties, or which authority would be responsible for enforcement should be discussed.
If the levy is passed, it would most probably be just the icing on the existing national tax cakes unless a coordinated framework was implemented.
The proposal, as of now, appears to be very far from a successful vote. The European Parliament does not have the power to impose taxes independently. If a member of the 27 countries wants to block the proposal for the EU gambling tax, then that country with the big iGaming sector can use the veto power.
Nonetheless, the debate is a sign of a step towards fiscal harmonization, which may have a substantial impact on the iGaming operators. Furthermore, the establishment of an EU-wide levy would drastically change the current balance between national sovereignty and financial integration at the EU level.
On the one hand, supporters point out the proposals ability to generate funds for socially deserving projects, especially, education and skills programs under the EU multiannual financial framework. In this way, presenting the tax makes it more acceptable politically.
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