EU Central Court Issues Ruling on Danish Online Gaming Tax

A Danish appeal arguing the compliance of proposed differentiated taxing for on and offline gambling activity has been ruled upon by the EU Central Court.

The Acceptance of Differentiated Taxing

Upon appeal, the court upheld the compliance in cases T-601/11 (Dansk Automat Brancheforening v Commission) and T-615/11 (Royal Scandinavian Casino Århus v Commission), thereby validating and accepting the differentiated gambling tax system of Denmark.

The key finding of the court which paved the way for the reversal of the original decision was that land-based applicants are not affected, penalized, or disadvantaged by the differentiated approach. The key weighting measure that maintains the appropriate and fair distinction between online and offline gambling from a European taxing standpoint is the fact that Member States will be able to set tax levels for online gambling activity based on competitive global online taxing rates that will generate market value rates for consumers. The decision for all intents and purposes acknowledges the need for a different pricing and rate system between online and offline gambling activity.

Origin of the Argument

The issue emanates from the Danish attempt to fairly and effectively channel Danish consumers towards regulated online gambling rates consistent with public policy objectives of the Danish Gaming Act. The Court's decision today confirmed that differentiated tax measures as submitted by the Danes are on principle general and fair measures that do not penalize, affect, exclude or in any way target specific groups of applicants.

The Court's decision was handed down in paragraph 52 of T-601/11:

"The applicant has not demonstrated … that the aid measure in question was liable to have a substantial adverse effect on the position of one or more of its members on the market concerned. The applicant’s members and, consequently, the applicant are therefore not individually concerned by the contested decision."