The People Have Been Heard: Portugal Looks to Reform Taxation

Published November 2, 2018 by Lee R

The People Have Been Heard: Portugal Looks to Reform Taxation

After getting a boost from shared liquidity, Portugal is looking to adapt its regulation to pursue more benefits.

Due to an unfriendly turnover tax, the Portugal market is bracing for one of the most significant reforms in the new era of regulation.

Adapting Taxation

Portugal business news outlet Jornal de Negocios reported that the Portugal government's preliminary fiscal budget for 2019 includes sweeping changes to significantly adapt the taxation system for online gambling operators.

New Proposal

The new system proposes a flat tax of 25% on all online gambling revenue to replace the current 15-30% sliding scale currently haymaking online casino and poker revenue and the 8-16% incremental tax shackling online sports betting turnover.

Proper Solution

The report did further specify that the proposed shift in Special Online Gambling Tax (IEJO) is at this point a preliminary proposal, pending finalisation of the final 2019 budget document, with the perception prevailing that the 25% proposed rate stands to remedy a stalling regulated online gambling market.

Woeful System

The current sliding taxes have stifled the regulated market’s ability to channel levels of activity to locally licensed operators, which has in turn discouraged further entry since Portugal issued its first online license in May 2016, with only 7 additional operators coming in since.

Grounds for Change

The taxation turnabout looks to be a result in no small part of Portugal regulatory body SRIJ inviting stakeholder input into revising its online licensing regime, with that feedback originally submitted to the government in May.

Q2 Returns

Q2 totals were nice, thanks to the World Cup 2018, but of the €37.3m in revenue generated by Portugal’s eight licensed operators, the government’s share came of €16.9m (45%) represented a drop from previous quarters.

The Breakdown

As for totals, online sports betting revenue brought €20.5m (£18m/$23.7m) in Q2, representing a jump from €13.9m year-on-year, with football accounting for 74.4% of all online sports wagers placed in Q2.

Online casino revenue in the period rose €5.4m year-on-year to €16.8m, with slots being the highest earning vertical. Another important boost came from poker, whose 20.4% contribution was bolstered in May by Portugal's historical entry into the shared liquidity network with France and Spain.

Outlook

The taxation adaptation could be the next key to Portugal effectively harnessing the benefits of regulating online gambling, on the heels of the new shared liquidity arrangement with larger pools in Europe. Let's hope it works out for a country that stands to benefit more than most. 

See also

Mexico to Introduce Online Gambling Reforms?

There Will Be No Betting Taxation Hike in Ireland in 2018

Portugal Prepared for its Share of Liquidity from First International Pool

Clash of the Titans: Brazil vs. Portugal

Quarterly Report: Portugal Forges Ahead in Q3


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