The web is full of virtual casino offers. They are soon to become legal in Germany for the first time – and that is calling the taxman into action. The most promising casinos are bitcoin casinos, like the ones listed at casinobtc.
The finance ministries of the federal states are planning special taxes on slot machines and poker games on the net: Eight percent of the stake is to go to the state. The industry is appalled.
The state parliament in Rhineland-Palatinate has already settled the matter, and it won’t be long now in other states. Across the republic, state parliaments are dealing with the new gambling law in these weeks, which is due to come into force in just over six months. For the first time, gambling on the Internet will be permitted nationwide. Slot machines on smartphones (read more here), virtual poker rounds, blackjack at the digital casino table, all of these were previously prohibited almost without exception. With the permits, the states want to get a billion-dollar black market under control in the future. Providers monitored by the authorities instead of rampant growth – and preferably: a lot of money for the treasury.
No sooner had all this been set in motion than several state finance ministries agreed to form a working group to sound out how the new services should be taxed in the future. In the meantime, an initial draft bill has been produced. The proposal provides for taxes of 5.3 percent for online poker games and a “virtual machine tax” of eight percent on stakes in slot machine games. The tax would be levied every single time the virtual reels spin, or eight cents per euro wagered. For other online casino games such as roulette, the draft does not yet provide for anything.
The paper was prepared by the state finance ministries of Hesse, North Rhine-Westphalia, Bavaria and Berlin. In contrast to the general gambling regulations, however, the Federal Ministry of Finance (BMF) is responsible for changes to the Racing and Lotteries Act, which has remained largely unchanged since 1922. In it so far the taxes for Lotterien, for horse and sport bets are regulated, in opinion of the countries fit still well with it.
On questions to the planned law changes one wants to answer in the federation however just as little as in several inquired countries. The BMF only confirms that changes to the existing law are being discussed. Apart from that, neither the concrete intentions behind the law nor the reasons for taxation at precisely this level can be found out officially on request.
In an internal report, ministries expect billions in additional revenue
Online casinos and Bitcoin casinos especially have a great future and therefore the additional revenue will be huge. Much of this is already contained in an internal report of the state working group from October 20. In it, the finance officials put the revenue from poker and vending machine taxes at 1.365 billion euros, calculated on the basis of 2018 sales. That is significantly more than the sales tax on their earnings, which the largely illegal providers would theoretically already have to pay today. Officially, the tax officials justify their tax reform plans with the fight against gambling addiction, which is also enshrined in the State Gambling Treaty. Its “steering purposes” are to be “flanked by taxation,” the report says. The selected tax rate of eight percent appears to be suitable for “promoting competitive framework conditions” and “contributing to the ‘drying up’ of illegal gaming operations”.
However, providers of virtual slot games usually recoup significantly more than 90 percent of the stakes. The industry is therefore appalled by the plans. A legal gaming offer that players would find attractive would no longer be possible, according to unanimous statements from industry circles – including some state lottery providers who are themselves pursuing plans for new online games.
With taxes at this level on their stakes, customers would continue to migrate to illegal providers without a license in Germany, they fear. “The plans of the Länder working group will inevitably lead to the objectives of the new State Treaty on Gaming being missed,” says Dirk Quermann, president of the Online Casino Association, in which several major casino and gaming providers are organized. What should be taxed, therefore, is what remains in the till after the winnings have been paid out to the players: the gross gaming revenue. However, as the internal report also states, the countries reject this in principle for the time being.