Table of contents
Taxation of sports betting complies with constitutional and European law.
From the very beginning, sports betting providers fought against a 5% tax on their sales. As a justification, they argued that the tax would violate numerous provisions of the Basic Law and would also not be compatible with applicable European law.
However, the Federal Fiscal Court (BFH) now classifies the taxation of sports betting, which has been in force since 2012, as compatible with the Basic Law and with European law. The 5% tax does not violate the principle of equality or the freedom to provide services, as it affects domestic and foreign providers equally.
Legal taxation according to the Basic Law
The Federal Fiscal Court confirmed the legality of the taxation of sports betting, which has been in force since 2012. This was done on the basis of the regulation in § 17 paragraph 2 of the Racing Betting and Lottery Act (RennwLottG). Thus, according to the Basic Law, the federation has legislative competence.
The principle of equality is not violated in taxation
According to the Federal Fiscal Court, there is no indication that the general principle of equality has been violated. Furthermore, there is no structural statutory enforcement deficit that precludes the collection of the tax. A deficit in enforcement exists only if a legal norm is not implemented in practice or is implemented insufficiently. However, this is not the case with taxation, as the RennwLottG uses both domestic and foreign providers of sports betting for taxation.
No restriction on the freedom to provide services
The Federal Fiscal Court does not recognize any restriction on the freedom to provide services and rejects the plaintiffs' statement that taxation is contrary to European law. If the law of taxation were illegal, the proceedings would be continued at the Court of Justice of the European Union.
However, since the taxation of sports betting affects domestic and foreign providers equally and on equal terms, according to the BFH, the free movement of services is not restricted and there is no reason for a negotiation before the EU.
Financial significance of the sports betting tax
The BFH emphasizes the considerable financial importance of the taxation of sports betting, which affects domestic and foreign betting providers alike. Together with the taxation of lotteries and racing bets, the total revenue in 2020 was more than $ 1.9 billion.
Reasonable sports betting tax of 5 %
The Federal Fiscal Court also emphasizes that the sports betting tax of only 5% is moderate. For example, with the entry into force of the new State Treaty on Gambling on 1 July 2022, online casino providers will have to tax all virtual slot games and poker rounds at the increased rate of 5.3%.
