During the last few years, several top online sportsbooks in the UK moved their headquarters to Gibraltar in order to take advantage of the low taxes offered by the overseas territory. The United Kingdom taxes online sports betting operations a hefty 15%, while Gibraltar’s tax was a lazy 1%, with a cap of €500,000. All that is about to change.
The government of Gibraltar has announced their decision to raise taxes on internet betting groups to 10%, which is the amount paid by all other businesses in the country. The change is being made in order to comply with European Union laws.
Gibraltar minister Peter Caruana explains, “To comply with EU law we must phase out the tax-exempt company system in 2010. However, in order to sustain our successful economic model we must retain a commitment to a very competitive corporate tax model.” Companies in Gibraltar that offer internet betting in the United Kingdom and other parts of the world will still be exempt from paying VAT, so despite the raise in taxes, they will still come out ahead.
Ladbrokes and William Hill are two of the largest online sports betting operators that recently relocated to Gibraltar. The new tax will certainly impact these groups, but they will have little recourse but to absorb the hit and continue on. “Nobody will leave, although we’ll all complain about the tax going up,” said a spokesperson for Victor Chandler, the online sports betting group that operates VC Bet. Victor Chandler moved to Gibraltar way back in 1998.
Gambling tax is one of the primary sources of revenue for Gibraltar. In 2009, even with the meager 1% tax on internet gambling operators, the government made €12.4 million from gambling tax revenue. Now that the tax is increasing tenfold, the territory stands to do quite well.