The Danish State Aid Case: Application of EU State Aid Rules to Differences in Taxation of Online and Offline Gambling
Abstract
The Danish State Aid Case: Application of EU State Aid Rules to Differences in Taxation of Online and Offline Gambling Martin Lycka T axation of gambling services is undoubtedly one of the most important considerations for whether or not to enter a newly regulated market. Competitive taxation is capable of ensuring that online gambling operators will be incentivised to apply for licenses in another country. A high level of interest by operators in a newly regulated market enhances the level of consumer protection in that market, because the so-far unregulated part of the market can be captured by the new regulatory regimeâwhich in turn results in more tax revenue for state coffers. EU member states have retained the competence to determine the tax levels of gambling services, both online and offline.1 However, their tax legislation must comply with EU state aid rulesâ i.e., rules against the extension of unlawful financial and other similar aid to certain undertakings or sectors in a market. It has been held by the European Commission that a difference in taxation between online and offline gambling sectors amounts to a state aid.2 Nonetheless, aid can be justified, provided that it is either inherent in