September 11, 2008

Dutch Senate Sets Online Gaming Tax at 40.85%

The Dutch Senate yesterday passed a proposed bill on gaming taxation, enabling the government to tax games of chance, including those provided by 'illegal' online operators.

The bill mainly concerned a change in the taxation method for domestic providers of 'illegal' online gaming, as well as for persons who win at foreign online gaming sites.

The Senate considered internet gaming to be comparable to regular table games offered in casinos, due to the fast succession of games available and the possibility to continue to stake earned winnings while playing.

For table casino games, a separate taxation method is already included in the current gaming taxation law. The Dutch Senate has decided therefore to introduce a similar tax system for games of chance offered online with tariffs set at 40.85%.

At the core of yesterday's debate was the moral question of whether taxing illegal activities implies an approval of the same. The majority of the Senate was convinced by Secretary of State De Jager, who argued that taxation law does not differentiate between legal and illegal providers, and that both should be treated in a fiscally equal manner.

In spite of ardent attempts by Socialist Party Senator Reuten to argue against the tax, the Senate agreed with the government point of view.

Christian Democratic Party Senator Essers pointed out that the bill only concerns an amendment to the Betting and Gaming Act which already provides for the possibility of taxing gaming proceeds from illegal gambling practices. In addition, he considered taxation a more effective tool to act against illegal practices than criminal proceedings, as preferred by the Socialist Party.

Senator Leijnse of the Labour Party took a more practical, rather than moral approach. His primary concern was how to block American online gaming providers from offering their games via the internet in The Netherlands.

Leijnse also requested information on how the tax authorities may encourage players to declare income from gambling proceeds, as well as how they can deal with gambling operators.

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