One of GVC Holdings’ online sports betting brands has received an unexpectedly high tax bill, following an audit by Greece’s taxman. The €186.77-million tax bill was addressed to Sportingbet, which GVC acquired back in 2013.
The Isle of Man-based gambling giant may thus be forced into paying nearly a quarter of its group revenue for 2016 (€843 million), based on the review by the Greek Audit Center for Large Enterprises, the company itself revealed in a Thursday statement.
As mentioned above, GVC purchased Sportingbet, excluding the latter’s Australian and Spanish operations which were acquired by rival William Hill, back in 2013. The gambling company pointed out in its statement from yesterday that the tax bill from the Greek audit authority encompassed a period between 2010 and 2011, or two years before GVC took over the online sports betting brand.
It is understood that other gambling companies have too been affected by surprisingly high tax bills from the Greek tax authority.
GVC explained in its Thursday statement that the tax assessment was “substantially higher by multiplies” of what Sportingbet had generated in revenue during the covered period. The company further pointed out that its Board disputes strongly the Greek taxman’s basis for assessment calculation as the “assessed quantum” was “widely exaggerated”.
GVC’s Action Plan
The gambling company has sought legal and tax advice from its Greek advisers and is contemplating on disputing the tax assessment in court. It clarified that if it brings the matter to court, the appeal process will actually be conducted in Greek courts.
However, it has entered into agreement with the Greek Audit Center for Large Enterprises to make monthly payments of €7.8 million over the course of the next two years. As GVC is preparing to appeal the tax bill, the money will be held in an account, as per its agreement with the Greek tax authority. GVC has also made a €200-million provision in its financial accounts for 2017 to cover the tax bill.
GVC’s planned takeover of rival gambling company Ladbrokes Coral is not expected to be affected by the recent tax developments in Greece. Last month, GVC renewed its talks to acquire its fellow gambling operator, with discussions resulting in a preliminary agreement for a £4-billion deal.
GVC and Ladbrokes have a long history of courtship. The two companies originally discussed a potential merger deal in 2016 amid growing concerns over the results from the UK government’s review into the nation’s gambling industry. The review was focused on the highly controversial fixed-odds betting terminals and its findings were published last fall.
Ladbrokes is the largest operator of such machines in the UK, and it feared that a potential FOBTs crackdown would hit its profitability significantly. Last fall, the UK Government confirmed that there would indeed be a crackdown on the controversial machines and MPs are set to announce what this crackdown would involve anytime now.
Ladbrokes Coral hopes that joining forces with a strong digital partner could help it offset losses caused by the pending reduction of FOBTs’ maximum stake.
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