SKS365 hit with €124m Italian tax claim

21 August 2019

PlanetWin365 operator SKS365 has been issued with a tax inspection report claiming that it owes €124m to the Italian authorities, having failed to declare significant revenue generated in the country's regulated gambling market.

An audit of the business carried out by the Guardia di Finanza (GDF) of the Reggio Calabria region claims the operator generated significant undeclared income. This was accumulated through the operation of unlicensed betting cafés, as well as bets placed online and through other means in the 2015 and 2016 fiscal years, it said.

The GDF claims that as a result of these activities, SKS365 owes €6m in regional taxes, €47m in corporation tax and a further €71m in income tax.

The document issued by the GDF, a law enforcement body that handles financial crimes, does not constitute a demand for payment. The operator has 60 days following the receipt of the report to submit a rebuttal to the Italian tax authorities, which will then reach a conclusion on the sum, if any, that is owed.

SKS365 told iGamingBusiness.com that the issue at hand was not one of the business avoiding tax, but instead an issue of revenue being considered to have been generated via its Malta-licensed base, rather than its Italian operation.

The years 2015 and 2016 saw changes to Italian gambling legislation passed, that resulted in internet betting cafés, known as CTDs, being required to secure licences to continue operating in Italy. Previously these establishments were tolerated, provided the operator was licensed in another European Union jurisdiction. SKS365 has been able to carve out a leading position in the Italian market as a result of its network of cafés becoming licensed, though the GDF claims that it continued to operate a number of unlicensed establishments.

SKS365 stressed that the alleged tax violations occurred under the business’s previous owners' control. The operator was acquired by Dutch private equity firm Ramphastos Investments in late 2016.

“The management appointed by the company’s current shareholder has implemented a highly regulated and solid corporate structure, strongly committed to compliance,” SKS365 said.

It pointed out that under this management, it had formed a supervisory body that works alongside the company’s legal, compliance and anti-money laundering departments, as well as overseeing control, auditing and risk management tasks across the business.

SKS365 warned that it would take action aimed at protecting its interests, investors or other interested parties should it suffer reputational damage as a result of the claims.

“Also, [SKS365] continues to cooperate with the relevant public authorities to fix the situation as soon as possible and to keep focusing on its only corporate mission: providing passionate people with the safest and most entertaining gaming solutions,” it added.

Ramphastos, meanwhile, said that while it did not normally comment on matters relating to companies in its portfolio, it was keen to stress that it was taking the issue very seriously.

A spokesperson for Ramphastos told iGamingBusiness.com that it was in dialogue with all relevant parties, but was unable to say anything about the legitimacy of the claim at this stage. The spokesperson also highlighted the fact that the activity in question was carried out before Ramphastos acquired SKS365, and was not uncovered by due diligence carried out pre-acquisition.

“[We] are happy to say that we remain very enthusiastic about the company, its innovative character, dedicated management and its potential to becoming the clear leader in the Italian sports betting market,” they added.

“Of course, a highly regulated and solid corporate structure that is strongly committed to compliance with the corporate mission to provide passionate people with the safest and most entertaining gaming solutions is inseparable with this ambition.”