Operators under tax investigation for Dutch grey-market-era activities

The Dutch government has published a memo revealing that – as of October 2021 – eight operators were under tax investigation for their activities in the country before it regulated online gambling, with authorities planning to look into seven more.

The memo was dated 28 October, 2021 – four weeks after the Dutch online gambling market launched. The memo was written by the Corporate Service for Professional Technology (CD VT) within the Tax and Customs Administration and was sent to “Dutch online gambling companies”.

It was revealed last week following a freedom of information request.

The memo said that – prior to the launch of regulated online gambling – a number of operators made money from the Netherlands that should have been subject to tax, but that these taxes were not paid.

“It has become apparent that Dutch online gambling companies have operated ‘fiscally disguised’ since the emergence of the internet and – wrongly – have not paid any tax in the Netherlands,” it said. “A number of current files have shown that the Dutch treasury has lost tens, if not hundreds of millions in tax revenue in recent years as a result.

“This mainly concerns gambling tax, corporate tax and income tax.”

Malta and Curaçao-based operators

These businesses, it noted, were mostly based in Malta or Curaçao.

“The core of the structure is that the gambling company (on paper) is based in Malta or Curaçao and has a license there to perform the activities. Because of this, they managed to transfer tens of millions of euros from the Netherlands for years to earn without having to pay tax on it in the Netherlands,” the memo said.

The memo revealed that “in recent years”, criminal investigations and investigations into media reports had led to the launch of three tax investigations. Here, it said that the total amount involved may be upwards of €200m.

However, it said that “recently” as of the memo’s October 2021 distribution, the tax office had detected several new cases. The amount of money involved in these cases varied from “several million” euro to €100m.

“So far, a total of 12 ‘Dutch’ online gambling companies have come into the picture,” the memo said.

“Tax investigations are currently being conducted into 5 of these companies. The proposal is to investigate the remaining cases.”

The memo added that the investigations would each take between 500 and 2,000 hours of work.

Fine and payments

Earlier today, Dutch regulator de Kansspelautoriteit (KSA) handed Toto Online a fine of €400,000 (£343,793/$415,307) for targeting advertising at young adults in the country.

In addition, Minister for Legal Protection Franc Weerwind has spoke out last week in support of payment providers following criticism from some MPs about delays with customer withdrawals.

Weerwind answered questions from Michael van Nispen of the Socialist Party and Mirjam Bikker from the Christian Union, both of whom raised concerns that some operators were paying out faster than other licensees.

Though Weerwind acknowledged that some withdrawal requests are processed faster than others, he said that it is the responsibility of national regulator Kansspelautoriteit (KSA) to monitor operators to ensure they are paying out in an appropriate time.

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