Tax: What is the tax take?

The licensing fees vary depending on the average sum of stakes and on the respective products, as some are not licensable and therefore no fees or costs may be charged, but in general for licensable products: Application fees Applicants do not have to pay an application fee. Licensing fees Licensing fees are regulated in sec. 9a (4) Interstate Treaty: For granting a licence for operating games of chance, for approved or expected gambling or betting stakes: Up to EUR 40 million, a fee amounting to 0.2 per cent of the gaming or betting stakes, at least 100 euros; Over EUR 40 million up to EUR 65 million, a fee of EUR 80,000 plus 0.16 per cent of the stakes exceeding EUR 40 million; Over EUR 65 million up to EUR 130 million, a fee of EUR 120,000s plus 0.1 per cent of the stakes exceeding EUR 65 million; or Above EUR 130 million, a fee of EUR 185,000 plus 0.06 per cent of the stakes exceeding EUR 130 million, shall be levied on the basis of the sum of the authorised or anticipated gaming or betting stakes in all participating countries. In addition, the regulator will levy fees and expenses for their other duties as stipulated in the State Treaty on Gaming. Minimum guarantee The insurance of players’ funds for EUR 5 million. This amount poses a particular challenge for small companies. The applicant needs to declare, in which way he wants to provide the security. Examples are bank guarantee, owner savings book, in this context special insurance policies required by the regulatory authority, are also difficult to obtain. There is no specific capitalisation requirement, though the GGL will evaluate during the licensing process whether an applicant has sufficient ‘own funds’ – e.g. via cash flow of existing own operations or via a group entity – to operate the business to be licensed according to the parameters set out in the business plan. Bingo could be offered by state-run operators only. Accordingly, licensing fees are not relevant to private operators. Casino: In case the casinos will be operated by private operators, such costs shall be imposed on them in accordance with the General section. Lottery: As lotteries are exclusively state-operated, they are not licensable, and no fees are payable. Skill games: Since skilled games are not regulated under the Interstate Treaty of 2021, the law does not stipulate fees. Software/B2B: Since software / B2B suppliers are not regulated under the Interstate Treaty of 2021, the law does not stipulate fees. Gambling taxation is stipulated in a variety of federal and state laws. Online sports betting, horse-racing and lottery taxation are subject to the federal Horse-Race Betting and Lottery Act. Simultaneous to the Interstate Treaty 2021, virtual slots and online poker were included in the Horse Race Betting and Lottery Act and are therefore subject to the gambling-specific tax rate. The federal VAT Act stipulates a VAT exemption for games of chance that are subject to the Horse-Race Betting and Lottery Act. The gambling-specific tax has to be declared on a monthly basis by way of a self-declaration procedure. In this procedure, the operator has to include the taxable amount in the form provided by the tax authorities and calculate the tax amount. The self-declarations are deemed tax returns meaning they will become legally binding (unless they are appealed within one month from submission). Since the German Fiscal Code generally stipulates in sec. 40a that not owning a local licence does not result in being exempt from taxation for an otherwise taxable behaviour in Germany, tax authorities may assume unregulated operations that are not subject to a specific gambling tax (see below) to be liable for VAT. Not reporting taxes in full and in due time may result in criminal liability for tax fraud. Accordingly, operating unregulated gambling in Germany may come with an ancillary liability for non-compliance with German tax laws. Betting is subject to a 5.3% tax on stakes, meaning that winnings cannot be deducted from the tax base. The operator (not the broker or betting shop owner) is the tax debtor, but the operator can choose to forward the tax burden to the customer. The so-called ‘Odds Reduction Model’ provides for a tax-optimised way of forwarding (parts of) the tax burden to the customer by imposing a fee, e.g., of 5.3% on winnings. The tax authorities have approved the Odds Reduction Model. Bingo: As the operation of bingo is qualified as a lottery, a tax of 20% on stakes applies in accordance with sec. 29 Horse-Race Betting and Lottery Act. Casino taxes are stipulated in the local Casino Acts of the federal states as well as casino licences, and vary considerably in terms of rate and structure. Most casino taxes will be in excess of 30% of GGR and will be structured to have tiered increases of the tax rate depending on GGR per year the casino operation yields. As a consequence, tax rates for land-based casinos in excess of 70% are possible if a casino is very profitable. Lottery: State lotteries are subject to a tax of 20% on stakes according to sec. 29 Horse-Race Betting and Lottery Act. Poker: Online Poker is subject to tax pursuant to the Horse-Race Betting and Lottery Act, namely to a 5.3% tax rate. The same applies to virtual slot machine games. Skill games: There are no skilled games specific taxes in Germany, but skilled games may be subject to VAT depending on the way the game is monetised. In general, it will depend on whether a skilled game qualifies as an ‘electronically provided service’ and whether taxable consideration for that service is paid by a German consumer to the operator. Software/B2B: Since software/B2B suppliers are not regulated under the Interstate Treaty of 2021, the law does not stipulate fees.