Gibraltar Online Casinos Relieved with Tax Ruling

For a while, it seems as if the tunnel was getting darker and darker for PartyGaming and other online gambling companies located in the tax haven of Gibraltar. In April 2004, the European Commission said the tax rules in Gibraltar provided companies based there with an unfair advantage over companies based elsewhere in the European Union.

The European Commission was attempting to crack down on regional selectivity, and told the government in Gibraltar that, by 2010, they would need to abolish their current tax regime (which exempts company tax) and implement a replacement tax regime instead.

This amounted to very bad news for both Gibraltar and the companies located there, particularly the gambling dotcoms. For some time, it looked as though Gibraltar-based online gambling giants such as PartyGaming (parent company of Party Poker and Party Casino) could be subjected to the UK corporation tax rate of 30%.

However, a recent European Court ruling has provided some much-needed relief for the beleaguered online gambling industry located on the tiny peninsula. Gibraltar's 1969 constitution provides the territory with fiscal autonomy and the region will probably be able to continue providing PartyGaming and other online gambling companies with an attractive tax regime.

In an Accountancy Age interview, PartyGaming's group finance director Martin Weigold said he believes the recent ruling had fully removed the risk that Gibraltar-based companies would be subjected to the full UK tax rate of 30%: "It's effectively removed one of the risks associated with the replacement tax regime that will come into effect at the end of 2010. We expect a low-cost tax regime that's non-discriminatory to take its place when the tax-exempt scheme is phased out."

Under regulatory fire almost everywhere in recent months, the online gambling industry was due for some relief. Despite bumper half-year results across the industry, executives of online gambling companies have not had a great deal to smile about in recent months, with US authorities arresting prominent industry executives Peter Dicks and David Carruthers and prominent US Republicans attempting to push a bill through Congress which would all but illegalize online gambling. French authorities then arrested two prominent online gambling executives, and warned there were more arrests to come.

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