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Liberalisation of the Danish online gaming market
The new legislative package, aimed at liberalising the Danish gaming market will come into force on 1 January 2012 having received the EU approval on 20 September 2011. The new legislation will make it possible for persons and companies to offer online betting and casino facilities in Denmark, based on a licence issued by the Danish gaming authorities. Licence holders are subject to a Danish tax of 20% on the gross income from Danish players and no absolute requirement of setting up local servers exists. The winnings of players are not subject to further Danish taxes. Taxand Denmark considers in detail, the effect this is likely to have on the tax position of the online gaming industry in Denmark.
The new Danish legislative package passed by the Danish parliament 4 June 2010, consists of 4 new statutes, which primarily serve to collect and re-enact the large number of former Danish gaming acts.
The possibility for gaming providers to offer online casino and betting services in Denmark is the major new initiative in the new Danish Gaming Act. The scope of the Act is not limited to persons or companies established in Denmark and is therefore of significance to international gaming providers with Danish players.
The "License fee" for a standard Danish 5 year gaming licence consists of (i) an application fee, (ii) a yearly fee based on expected yearly income, and (iii) a gross income tax.
|5-year betting or online casino licence (either one)||DKK 250,000 each application|
|5-year betting and online casino licence (both)||DKK 350,000 joint application|
|(ii) Expected yearly income||Fee|
|Less than DKK 5,000,000||DKK 50,000|
|DKK 5,000,000 - 10,000,000||DKK 250,000|
|DKK 10,000,000 - 25,000,000||DKK 450,000|
|DKK 25,000,000 - 50,000,000||DKK 650,000|
|DKK 50,000,000 - 100,000,000||DKK 850,000|
|More than DKK 100,000,000||DKK 1,500,000|
|(iii) Gross income tax||%|
|Calculated on income from players in Denmark||20%|
Smaller providers, expecting a yearly income of not above DKK 1 million, can apply for a 1 year maximum income licence, for which they pay a joint fee of DKK 50,000, covering both the application fee and the yearly fee.
Danish players, on which the 20% taxable gross income of the gaming provider is being calculated, is not subject to Danish income tax on their winnings from the online betting and casino sites.
Computer servers used by the licence holder to provide the online betting or casino services are not required to be located in Denmark if the country, in which the server is located, is one with which Denmark has an agreement of shared information. Currently, such agreement only exists with Alderney but more are expected to come in the near future.
Applications for a Danish gaming licence, by a gaming provider, being either a person or a company, wishing to offer online betting or casino services in Denmark, must be filed with the Danish gaming authorities. Applications must be filed using a specific form and can be obtained regardless of the provider's place of establishment. Providers established outside the EU/EEA must however appoint both a fiscal and a legal representative in Denmark.
The initial application deadline for 1 January 2012 licences was 17 October 2011, however the gaming authorities may grant gaming providers submitting their application after this date, dispensation as to enable them to provide online gaming services in Denmark after the 1 January 2012 deadline.
Due to the short period between the application deadline and 1 January 2012, the gaming authorities will initially only issue 1 year licences under the standard licence scheme. These temporary licences will automatically be extended to 5 years, once the gaming authorities have finished their review of the application, if the application is accepted.
All websites as well as all credit card payments to non-licensed providers can be blocked by the Danish authorities as of 1 January 2012, as part of new legislative measures
The liberalisation of the Danish gaming market will allow international licensed providers of online betting and casinos to legally provide their services in Denmark without the need of setting up a Danish company or having computer servers in Denmark.
Taxand Denmark believe that there are a couple of factors that present international gaming providers with the ability to operate in and also develop this growing market. One reason is the relatively low tax of 20% calculated solely on the gross income of the participating Danish players. The other reason is the shielding measures being established by the authorities from 1 January 2012, preventing all non-authorised access to the Danish market.
Even though this legislative package was passed by the Danish parliament back in June 2010, Denmark was forced to await EU approval of the measures which some land based casinos felt was unfair competition and a violation of the EU state subsidy rules. The reason being, that while online casinos are only taxed 20%, land-based casinos are taxed between 40-75% on their gross income. Despite this claim, the EU Commission found that the benefit of a liberalised Danish gaming market outweighs the possible downsides, which may arise from the difference in taxation.
For gaming providers wanting to be ready to offer online betting and casino services in Denmark when the market opens on 1 January 2012, the official application deadline was 17 October 2011 at 12 pm CEST. However, applications submitted after this date may receive dispensation by the gaming authorities in order to legally offer its services in Denmark as of 1 January 2012 and thus avoid any shielding measures towards their services.