Online gambling firms based in the Caribbean nation of Gibraltar had cause to celebrate this week following a ruling by the European Court. Efforts by the European Union to force Gibraltar to increase its taxation rate were quashed by the Court, who ruled that the country’s 1969 constitution on taxation will remain.

According to a report in the Accountancy Age, Gibraltar has traditionally been widely regarded as a tax haven for online gaming operators, many of which have chosen to locate their head offices in the Caribbean. The low taxation online gambling firms have paid have helped them to achieve record profits in recent years, while evading corporation tax and a host of other taxation methods.
The European Union began its efforts to curb Gibraltar’s generous tax breaks in 2004 by working to abolish the country’s exempt company tax scheme. The European Commission claimed that Gibraltar’s taxation gave firms based there unfair advantages over their competitors, referring to the situation as contributing to “regional selectivity.”

The Commission proposed that Gibraltar should be made to alter its taxation rates by 2010, effectively meaning that online gaming operators would be forced to pay corporation tax at a rate of 30 percent.

However, these fears have been dispelled following the European Court’s ruling. According to Martin Weigold, group finance director at poker giant Party Gaming, the ruling has reassured firms that they will not be forced to pay increased taxes of 30 percent as in the UK. “It’s effectively removed one of the risks associated with the replacement tax regime that will come into effect at the end of 2010,” Weigold said. “We expect a low-cost tax regime that’s non-discriminatory to take its place when the tax-exempt scheme is phased out.”

Back to September 2006 Online Gambling News
Back to latest Online Gambling News
Back to Online Gambling Archive