We advise companies from the gambling and gaming industry in matters relating to tax and company law, and represent them in fiscal proceedings against tax authorities and tax courts. Also, we defend clients in criminal proceedings for tax-related offences against accusations of tax evation.

Games of chance have always been subject to a separate gambling tax, in contrast to other economic goods and services.  This is due to the fact that the German federal government as well as the states and municipalities have provided for taxes and duties for games of chance, with varying justification. In some constellations, the usual taxation is replaced by a special gambling tax, e.g. the exemption of sports bets from VAT, whereby a special sports betting tax applies to such bets.

The provisions relating to taxes and duties associated with gambling can often not be understood without in-depth knowledge of the specific characteristics of gambling regulation.  Depending on the focal point of the matter, we also can draw on a strong network of Germany’s most experienced tax experts, in addition to our own expertise.

The focus of our consultancy services includes:

Due diligence

It is not only the fragmentation of regulatory and tax law that makes an expedient legal and economic evaluation of the deals extremely complex. Political developments in particular also determine the future development of the industry in the German market, and therefore the evaluation of the target company. Insofar, M&A consultation for the players in the gaming sector differs significantly from other industries. This requires an experience-based analysis of the specific purchase offer under aspects of German gambling law as well as German gambling tax law.

Sports betting tax

In July 2012, a highly controversial special tax was introduced on sports bets. Under these rules, the provider has to pay 5% of the customers’ stakes to the treasury. Tax assessments must be filed once per month. Numerous complaints are pending with the tax authorities and the finance courts.

According to estimates, more than one billion Euro in sports betting tax has been paid to the German treasury up to now, even though none of the 20 sports betting licenses provided for by the Inter-State Treaty on Gambling (GlüStV) have been issued so far.

In this context, we assume the following tasks for you:

  • Optimisation under aspects of tax, including adaptation of standard terms and conditions
  • Advice regarding applicability, tax basis and calculation
  • Registration with the competent tax office
  • Examination and filing of tax assessments with the tax office
  • Correspondence with the tax authorities in the event of inquiries
  • Filing of objections with tax authorities and finance courts
  • Representation in court
Value added tax on (online) games of chance

In Germany, some games of chance are exempt from VAT, e.g. sports betting and lotteries. However, other gambling offers, such as the offers provided by casinos and slot gaming machine operators, are subject to VAT.

Since 1 Jan. 2015, VAT may also apply to online games of chance offered from another EU country to German customers, see http://www.timelaw.de/cms/front_content.php?idart=1029

In this context, we assume the following tasks for you:

  • Optimisation under aspects of tax law
  • Advice regarding applicability, tax basis and calculation
  • Registration with the competent tax office
  • Examination and filing of tax assessments with the tax office
  • Correspondence with the tax authorities in the event of inquiries
  • Filing of objections with tax authorities and finance courts
  • Representation in court
Lottery tax

Lottery tax only applies to public lotteries and draws operated in Germany, Section 17 (1) of the Act on Horse Races and Lotteries (RennwLottG). The tax rate is always 20% of the planned price of all tickets combined. As the tax portion of the price is not subject to taxation, this corresponds to 16 2/3 % of the stakes. Under certain conditions, smaller draws and lotteries in particular may be tax-exempt pursuant to Section 18 RennwLottG.

The provider of the lottery/draw must meet the requirements set out in Section 5 (1) No. 9 of the Corporate Income Tax Act (KStG), i.e. the corporation, group of individuals or assets must exclusively and directly serve non-profit, charitable or church-related purposes, and the provider must therefore be exempt from corporate income tax liability. The net income from the lottery/draw must be used for these purposes.

In this context, we assume the following tasks for you:

  • Optimisation under aspects of tax law
  • Advice regarding applicability, tax basis and calculation
  • Registration with the competent tax office, including confirmation of non-profit status
  • Correspondence with the tax authorities in the event of inquiries etc.
  • Filing of objections with tax authorities and finance courts
Other charges under gambling law

Entertainment tax:

Many cities and municipalities require payment of a so-called entertainment tax on slot gaming machines and betting shops. The applicability of this tax, in particular to the latter, is highly controversial.

Casino tax:

Casino tax is regulated on the state level. The rate of this tax differs significantly depending on the relevant federal state.

Gambling charge pursuant to the Schleswig-Holstein Gambling Act (GlüG):

Since 01 March 2012, this charge has applied to online gambling providers in Schleswig-Holstein, except if the charge is superseded by the sports betting tax or value added tax.

In this context, we assume the following tasks for you:

  • Optimisation under aspects of tax law
  • Advice regarding applicability, tax basis and calculation
  • Registration with the competent tax office
  • Correspondence with the tax authorities in the event of inquiries
  • Filing of objections with tax authorities and finance courts
  • Representation in court
Taxation on profits from poker and sports bets

Profits from the participation in poker tournaments may be classified as income from a commercial enterprise, and may therefore be subject to income tax. For details, please go to: http://www.timelaw.de/cms/upload/Interview_PokerStrategy1.pdf.

In contrast to lotteries, poker is not a pure game of chance, and may therefore, according to the German Federal Finance Court (BFH) be a commercial enterprise. The BFH decided that profits from the participation in poker tournaments may therefore be subject to income tax as income from a commercial enterprise (judgment of 16 Sept. 2015, ref. X R 43/12).

In this context, we assume the following tasks for you:

  • Optimisation under aspects of tax law
  • Advice regarding applicability, tax basis and calculation
  • Registration with the competent tax office
  • Correspondence with the tax authorities in the event of inquiries
  • Filing of objections with tax authorities and finance courts
  • Representation in court
  • Representation and consultancy services relating to criminal proceedings due to possible tax evasion

Your Team:

Claus Hambach LL.M.

Partner

Dr. Stefan Bolay

Salary Partner