Danish Internet Poker Players Get Taxed

Denmark native, Gus Hansen

Looks like it's not happy times for Danish internet poker players, as I got the following in my email box from InterPoker today:

As a result of recent pronouncements by the Danish tax authority advising that winnings earned by Danish players through internet poker rooms will be taxed as income unless the poker room in question is operated from an EU member state, we have received a number of queries as to the jurisdiction from which our internet poker room is operated.

Please be advised that our poker room is licensed by and operated from Curacao, which is a part of the Netherlands Antilles. While Curacao is not an EU member state, it does enjoy a special relationship with the EU as an overseas country or territory or OCT of the Netherlands. OCTs are provided for by Part 4 of the Treaty of Rome, which reads in part:

Article 183
Association shall have the following objectives.
1. Member States shall apply to their trade with the [OCTs] the same treatment as they accord each other pursuant to this Treaty.

It is our view following discussions with legal advisers, that the Danish tax authority will have to recognize that the Netherlands Antilles should be treated as if it were an EU member. We also note their recent declaration that winnings earned from sites located in Gibraltar are not subject to their tax. Gibraltar is not a member of the EU, but enjoys a special relationship with the EU, albeit different from that of a OCT, and as such is not exactly the same situation as the Netherlands Antilles. It does show that non-EU entities do enjoy the special relationship with the EU.

We provide this for information only and do not accept responsibility or liability should the Danish tax authority or other governmental agency disagree with our view. We do not provide legal or tax advice, and encourage you to seek your own advice on this issue.

Yours sincerely,

Marc Waxman Head of PartnerLogic

Quite an interesting email to receive in the morning. A keen eye would have observed that this doesn't affect Party Poker, as they are based out of Gibraltar. However, the Isle of Man, which is where PokerStars is based, might have some issues, although this is unclear due to the special privileges that these micronations seem to have in the EU. More about the Isle of man here.

In any case, most of the internet poker rooms are based out of small tax haven type nations in or around Europe. These include big poker sites such as:

Party Poker (Gibraltar)

PokerStars (Isle of Man)

PokerRoom (Sweden)

Pacific Poker (Gibraltar, Israel) and

Paradise Poker (UK)

However, major poker rooms outside of the EU include:

Fill Tilt Poker (Costa Rica, Los Angeles)

Titan Poker (Antigua, Israel)

Absolute Poker (Costa Rica)

Bodog (Costa Rica, Canada)

Noble Poker (Antigua, Israel) and

Ultimate Bet (Antigua).

Guess this means at least the EU poker sites will be happy, given that Danish players will be flocking to the sites where they won't have to pay taxes.

More resources on Danish related taxes, gambling and poker can be found at this Google Answers page, definition of game of skill under Danish law.