European Commission Clears Danish Tax Treatment Of Casinos

Reprinted from Tax Notes Int'l, October 17, 2011, p. 184

The European Commission on September 20 approved Danish legislation liberalizing the country's gambling market, stating that even though the lower tax rate the legislation provides for online casinos versus traditional Danish casinos constitutes state aid, the benefits of a liberalized Danish gambling market outweigh the downsides that could arise from the difference in taxation. (For a European Commission release (IP/11/1048), see Doc 2011-19919 or 2011 WTD 183-19.)

As of January 1, 2012, it will be legal to provide licensed online betting or casino services in Denmark. The Danish authorities will be entitled to block Danish access and credit card payments to nonlicensed websites.


The new Danish legislative package, which will enter into force on January 1, 2012, consists of four new statutes: the Gaming Act (spilleloven), the Gaming Tax Act (spilleafgiftsloven), the Danish Game Act (loven om Danske Spil A/S), and the Gaming Distribution Act (spiludlodningsloven).

The primary purpose of the legislation is to update the Danish gambling legislation, which consists of laws that in some cases are more than 100 years old. The new legislative package serves to collect and reenact the large number of former Danish gambling acts, as well as to liberalize the Danish gambling market, thereby opening it up to international online gambling service providers.

The legislation, which was passed by the Danish parliament back in June 2010, had to await EU approval because of objections by some land-based casinos. They claimed that because the legislation provides a 20 percent tax rate on gross revenue for online casinos compared with rates of 40 to 75 percent for landbased casinos, it created unfair competition and violated the EU state subsidy rules.

The Liberalization

The liberalization of the Danish gambling market allows gambling service providers to offer online casino and betting services in Denmark. Providers can be persons or companies, both inside and outside the EU/ European Economic Area. The development is therefore of interest to international online gambling service providers with players located in Denmark. Providers established outside the EU/EEA must, however, appoint both a fiscal and a legal representative in Denmark.

International online gambling service providers are not required to have or set up computer servers in Denmark if their server is located in a country with...

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