More gaming taxes from the Italian market?
The risk of higher gaming taxes in Italy arises again as part of the proposal from the Government that should collect additional € 3.4 billion.
The usual stressful period for the Italian gaming market is the end of the year. This is the time when the budget law is approved and there is always the risk of new taxes, commissions or duties are introduced.
This year it seemed that gambling operators were “save and sound” and spent a quite Christmas period. But the request by the European Commission to the Italian Government of identifying additional € 3.4 billion of tax entries in order to “cure” its accounts led to further discussions on potential new gaming taxes.
The current proposals on the table
According to the press, the Government is considering to increase
- the tax rate on VLTs and NewSlots (the so called comma6a or AWPs) of 0.5% in 2017 which should lead to € 280 million of tax entries, with a potential further 0.5% increase in 2018 that would be accompanied by a reduction of the minimum payout and
- the minimum bidding price for the tender relating to the Superenalotto license from € 100 million to € 300 million so avoiding that, due to the lack of bidders, the license would be awarded at a price below expectations.
The above occurs in a period when the lack of agreement between the Government and the municipalities on the location of betting shops/gaming halls and their time of operation is creating a major chaos in the market. It is clear that an increase of the taxation cannot come together with a restriction on the premises where machines can be installed.
Are higher Italian gaming taxes possible?
The Italian accounting court has held in several instances that an increase of gaming taxes would not necessarily lead to higher entries for the State. Indeed, higher taxes would oblige to reduce the payout and, since the taxation is based on turnover, the amount of money wagered by players would consequently reduce. Also, if the payout is lowered, there is a risk that also the amount of spending is going to be lowered as the gaming might become less engaging.
At the same time, if the Government declared that its plan is to reduce the number of NewSlots by 30%, it is not clear how they plan to get additional tax entries from the sector.
In all this picture, the online gaming sector should be “saved” since its size is extremely small, if compared to the land-based market. Therefore any change in the taxation on online gaming would not lead to a major impact on tax entries.
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WRITTEN BY GIULIO CORAGGIO
IT, gaming, privacy and commercial lawyer at the leading law firm DLA Piper. You can contact me via email at firstname.lastname@example.org or email@example.com or via phone at +39 334 688 1147.