Gibraltar Increasing Online Gambling Tax

Gibraltar has been a tax haven for online casino operators for years, offering extremely low tax rates and a solid licensing and regulatory regime.

Groups such as William Hill, Victor Chandler and Ladbrokes have always seen The Rock as a way to avoid the high taxes imposed on them by the UK government.

Gibraltar, for its part, has always enjoyed revenue from these groups. A recent newspaper article showed that the government earned €12.4 million in taxes from online gambling, charging a rate of just 1% with a tax cap of €500,000 per group.

However, Gibraltar recently announced that it will increase the tax rate from 1% to 10% from the beginning of next year.

The government cited the need to comply with European law for this move.

"In order to comply with EU law, we must phase out the Exempt Company regime in 2010," said Gibraltar's First Minister, Peter Caruana. "However, in order to maintain our successful economic model, we must remain committed to a very competitive corporate tax model."

It remains unlikely that online gambling groups will move from Gibraltar, despite the ten fold tax hike.

"Nobody will leave," predicted Victor Chandler, "although we'll all complain about the tax going up."

Online gaming groups will continue to be exempt from paying VAT in Gibraltar, allowing them to continue to enjoy a competitive tax regime.

In comparison, British based web operations need to pay a 15% gross profits tax and a 10% racing levy.