The taxation framework in the German casino industry came under extra scrutiny this week as the European Commission (EC) revealed that they will be launching an investigation.
The EC will probe the regulations governing taxation policy for land-based casinos in Germany. The probe will examine whether some grants provide preferential treatment for casinos that are owned by the state, which would be against European Union rules.
According to the EC, industry figures have complained about the way that the German state operates in this area. The complaints apparently allege that some public casinos have been offered both guarantees and tax grants in the form of state aid. If true, this would be in violation of European business law.
As well as investigating this issue, the EC also say that they will probe the extra state-level charges that the German government places on private casino operators. There are fears that this practice could effectively disadvantage private operators and create an unequal market.
There are currently 65 such casinos in Germany. Around half of that number are part or fully owned by German authorities. According to the current regulatory frameworks, a German state has the power to devise its own licensing conditions, as well as setting industry tax rates through state specific acts of law.
The EC is particularly concerned about the government of North Rhine-Westphalia, which has amended its Casino Act. The amendments give a series of concessions on tax to the state-supported casino operators Westspiel GMBH. Some insiders suggest that these tax advantages have allowed the operator to gain dominance of the market in that sector of Germany.
The EC has confirmed that individuals and organisations will be invited to make their comments on the situation as part of their investigation.