888 Holdings recently announced that it has made a tax settlement pact with the Spanish government, according to which the gambling company will have to pay the government €7.4 million as tax for running its gambling business in the Spanish market previously.
The Spanish government, which is all set to change its gambling law and regulatory framework the following month, has demanded that several gambling companies must pay taxes to the government for operating online gaming services in the Spanish market between January 2009 and May 2011.
Although no official statement was made to the effect, companies that agreed to pay taxes are believed to stand a better chance of getting a license from Spanish gambling authorities to launch their online gaming sites in a regulated Spanish online gaming market.
888 Holdings is the latest of the several gambling groups that have announced that they have decided to pay taxes to the Spanish government. Bwin.party Digital Entertainment Plc. has agreed that it will pay the Spanish government €25 million in taxes, along with interest and surcharge coming up to €8 million. Sportingbet has also announced that it will pay the Spanish government €14 million along with interest and surcharge up to €3.2 million, and Betfair has announced that it will pay as much as €10 million to Spain.
In addition to €7.4 million in taxes, 888 Holdings will pay interest and surcharge up to €1.3 million. The company plans to use existing cash resources to pay these taxes.
888 Holdings stated in an official press release, “The group has been paying gaming duty in respect of its Spanish operations since May of 2011. Following this payment, 888 believes that it has fulfilled all requirements to receive a Spanish iGaming license with awards set to begin at the start of June.”
Online gambling companies are now worried that other EU countries will also copy Spain and demand taxes for operating in their respective markets in exchange for Internet gaming licenses. But gaming analysts are of the opinion that short-term pain could lead to long-term gain for these companies, which will rake in huge profits running online gaming sites in regulated EU markets.
According to BarCap gambling market analysts, “While this is an initial cash outflow, if it aids the licensing process and leads to more clarity in a key European market, this could be viewed as a positive in the medium term.”