Tough German taxation regulation has forced online gambling group Betfair to pull out of Germany. The company, which runs an online sports betting exchange in Germany, blames a five per cent turnover tax for the move.
Betfair has argued that as it does not actually take bets but allows players to bet with one-another, it should be exempted from the tax regulation.
The immediate effect was that shares in Betfair fell but recovered to trade at 750p – the company floated two years ago at £13 per share.
In a statement, Betfair said that it had sought clarification of its necessity to pay the tax with the relevant authorities in Germany, but that they had not been able to agree with Betfair’s interpretation.
In the current year about four per cent of betting exchange revenue at Betfair came from Germany, adding £6m to overall revenues. The company still has some business in Germany, including casino, poker and traditional fixed odds betting, but it said that this business would not be minimal after the withdrawal of the online sports betting exchange.
The company has not paid tax on this element of its business while the discussions with the German tax authorities have been ongoing, but if it is now demanded of Betfair then it could cost the company around £25m.
