Victor Negrescu, Vice President of the European Parliament, has proposed a new initiative: a unified 1% tax rate for online gambling operators across the EU, expected to generate 2 to 4 billion euros in revenue annually, specifically for education and youth policies. This seemingly ideal proposal, however, immediately encountered the legal reality of the European gambling market—tax sovereignty firmly held by member states, with national tax rates ranging from 5% to nearly 40%, a significant disparity. In plain terms, it's about shearing the gambling industry to fund EU expenditures, but each member state is holding tight to their own purse strings.
Proposal Ambition: The Logic Behind 1% Tax Rate for Education and Prevention
Negrescu believes that online gambling, inherently a cross-border digital industry benefiting from a single market and shared digital infrastructure, should contribute to the social costs it incurs. Over 20 European Parliament members have signed in support of this amendment. If estimated at 20 to 40 billion euros annually, it could raise up to 280 billion euros over a seven-year budget period for education, training, and addiction prevention programs. The proposal also advocates for coordinated EU enforcement measures against illegal operators, squeezing the black market from payment and advertising ends.
Economic Reality: High Tax Rates Driving Operators Away, Black Market Growing
German legal experts point out that Germany's betting turnover tax of 5% on online slots and poker has overwhelmed licensed operators, with some exiting the market and the black market continuously growing. Imposing an additional EU tax would only accelerate this trend. Dutch lawyers also warn that the Dutch tax rate has risen from 29% to 37.8%, with the government estimating that over half of the GGR comes from the black market, and further tax increases would worsen the situation. The industry consensus is that excessive taxation will only destroy the legal market and strengthen the illegal market.
Legal Obstacles: Tax Sovereignty and Member State Veto Rights
According to Article 113 of the Treaty on the Functioning of the European Union, any coordinated measure on indirect taxes requires unanimous consent from the Council. This means any unified gambling tax proposal could be vetoed by any member state. Legal experts believe that direct taxation through regulations would lead to serious disputes over competence and subsidiarity principles. Maltese legal circles bluntly state that the proposal is legally unfeasible and at least requires prior coordination of gambling regulation, which past attempts have already failed. An EU Commission spokesperson has clearly stated that their own proposals do not include a gambling tax. Interested in the latest updates on European gambling policies? PASA official website keeps you informed.
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This article is from "PASA-Global iGaming Leaders," a gambling industry news channel:https://t.me/pasa_news
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