Part 1: The regulatory backdrop
above €5m, though with a limit
set on the tax take of 30% of total
gross revenues.
For sports betting, a separate
regime was introduced that sees
an 8% turnover tax applied on all
revenues up to €30m and then a
further 8% (i.e. 16% in total) applied
on revenues above that figure (see
Table 1).
It is the tax regime that
severely blunted the enthusiasm
of international gaming operators
to take up licences. Indeed, as
of this summer only 13 have
been issued, with half going to
licensees from abroad. There
have been five licences issued for
sports betting and a further eight
for online gambling.
The only recognised international
operators are Betclic and
PokerStars (which remains the only
poker licensee), while homegrown
competition comes from Bet
Entertainment Technologies (bet.
pt), Casino Portugal and Casino
Estoril (both of which also now
run sports betting operations) and
finally Jogos Santa Casa’s Placard.
pt sports betting offering. Another
relatively new entrant is Nossa
Aposta (Our Bet).
Óscar Madureira, a lawyer
at Lisbon-based practice Rato,
Ling, Lei and Cortes, points out
that the tax regime installed by
Reduced revenues may mean
suppliers feel they cannot
generate sufficient income in
these jurisdictions in respect
of services supplied and could
be reluctant to enter into
agreements
Gavin West, Smith Cooper
the Portuguese authorities is
among the costliest in Europe.
“The current tax regime (uses)
turnover as tax base as opposed
to the gross gambling revenue
(regimes) used by the majority of
Europe’s regulated jurisdictions,”
he points out. “It makes Portugal
one of the most expensive
jurisdictions for operators to
provide their services in, and
therefore highly unattractive.”
The perils of high-tax gaming
regimes for the business models of
most online operators are laid out
by Gavin West, director of VAT tax
advisory at Smith Cooper. “High
gaming taxes can price certain
operators out of a market,” he says.
“This can be even more the case
where an operator is buying in
services from third parties rather
than developing in-house.”
As West points out, platforms
and software content are often
supplied under revenue share
arrangements, which are calculated
on gross wins less any gaming
taxes paid. “Reduced revenues
may mean that suppliers feel they
cannot generate sufficient income
in these jurisdictions in respect
of services supplied and could be
reluctant to enter into agreements,”
he suggests. “Alternatively, they
could impose minimum payment
thresholds on operators thus
protecting their income but making
it too expensive for operators.”
The peculiarities of the taxation
Table 1: Portugal tax rates breakdown
Product
6
Initial tax rate (on turnover) (%) Upper rate threshold Effective upper tax rate (%)
Sports betting 8 €30m 16
Gaming 15 €5m 30
Portugal: The challenges and potential in one of Europe’s most controversial markets