Spain praised for 'fantastic' tax cuts for online operators
Spanish legislators have slashed tax rates for online gambling operators in the country in a move that has been described as "absolutely fantastic" news for the sector.
On page 155 of the 771-page annual budget breakdown, a string of tax cuts for online gambling operators were confirmed – headlined by a five-per-cent cut in gross gaming revenue from 25% to 20%.
The tax cuts will provide a further boost for Spain’s online gambling sector, which is experiencing steady growth. Spain’s gambling regulator, the Dirección General de Ordenación del Juego (DGOJ), recently reported a 27% year-on-year increase in online gambling revenue for the first quarter of 2018.
Santiago Asensi, managing partner of Spanish gaming law firm Asensi Abogados, told iGamingBusiness.com that the new tax regulations will be “good news for everyone”, including the government coffers, which he believes will benefit from a hike in the tax take.
“Operators will be able to make better offers to the players who will not go to illegal markets," he said. "The latest figures from the DGOJ show that all areas of online gambling are expanding, particularly with sports betting and online casino games, so I believe that these new measures will also lead to more tax being collected.”
Although the DGOJ has been lobbying the Spanish government for many years to reduce tax rates for online operators, Asensi acknowledged that it would have been “politically very difficult” to introduce such changes at a time of severe austerity across the broader economy, which endured a savage downturn during the global financial crisis.
However, with the economy having expanded by 3.1% in 2017, driven by a significant increase in exports, Spain’s Ministry of Finance has found the right time to bring in the changes, buried in a lengthy document alongside hundreds of other budget decisions.
“The DGOJ has been working very hard to reduce the rate for years, but if a party had announced plans to reduce taxes for online gambling companies while asking for sacrifices from the general population, it wouldn’t have got many votes,” Asensi added.
“However, now the Spanish economy has recovered, it is the right time.”
The five-per-cent cut will apply to online fixed-odds betting and sports betting, fixed-odds horse racing, betting exchanges and online casino games, bingo and poker.
Companies located in the tiny Spanish enclaves of Ceuta and Melilla on the northern shores of Morocco’s Mediterranean coast will continue to be taxed at 10% of online gross gaming revenues.
The tax rate on pari-mutuel sports betting gross gaming revenue was also cut from 22% to 20%, bringing the rate in line with state-owned betting services.
However, the tax rate for pari-mutuel horse racing and pari-mutuel pool betting gross gaming revenues has been increased from 15% to 20%.
The changes were effective from July 1 and have been widely welcomed by companies with interests in the Spanish market who have long argued that the tax rates for online operators have been prohibitive. It emerged in April that Spain’s Congress of Deputies, the lower house of the national government, were looking at slashing tax rates for gambling operators.
Picture source: Luis Javier Modino Martínez