Portugal’s government is to introduce a new tax rate of 25% on all types of online gambling revenue, replacing the current sliding scale system.
At present, operators pay tax at various rates depending on how much revenue they post and the type of gambling services they offer.
A sliding scale of between 15% and 30% is set for online poker and casino games while firms pay an incremental tax of between 8% and 16% on sports betting turnover.
Part of the 2019 State Budget proposal, being debated by MPs until the end of November, is that a Special Online Gambling Tax is launched to replace the existing tax systems. This represents a significant increase for operators offering online sports betting and allows the State to grab more revenue from the fledgling online gambling and betting market.
Online sports betting income hit €20.5m in the quarter to June 30, 2018 up from €13.9m in the same period last year.
Football accounted for 74.4% of all online sports wagers placed in the quarter. Online casino revenue in the period was also up €5.4m to €16.8m, with slots the main source of income.
Poker’s share of the overall sector increased to 20.4%, boosted by Portugal joining the shared liquidity network with France and Spain in May 2018.
The significant increase in tax for operators in a small market such as Portugal may see operators pull out, in order to concentrate on lower tax areas with more potential customers.
UPDATE
The flate rate tax proposal is not final yet. The Special Tax on Online Gambling is not included in the final 2019 State Budget document.
The budget, where the proposal was thought to be included, is up for debate by MPs until the end of November.
What remains unclear is if the gambling tax proposal will be reinstated or not. With the new elections due in late 2019, the budget year allows for better provisions for the civil service so the government is looking for sources of additional income.
Taxing online gambling and sports betting seems to be an easy option for them.
What the creators of the proposal may not realise, is that the higher taxes will be detrimental to the local gambling operators and players will switch to internationally-licensed gambling operators.
