British gambling giant Paddy Power Betfair has been hit by a massive tax bill worth £49 million (€55 million) in Greece and Germany.
The gambling operator confirmed that the demands for the cash payments have originated from legacy tax assessment in the two European counties. It also shared plans to mount a legal challenge against the authorities which imposed the bills relating to Germany-based Betfair Exchange and the company’s paddypower.com online business in Greece.
The group wrote in a statement that it strongly opposes the basis of the two assessments and confirmed its intention to appeal the bills in line with the legal and tax advice it has received.
As it became clear, a payment order for approximately €40-million (£36-million) has been imposed on the British gambling company by the Hessen Fiscal Court. The German court found that the aforementioned amount is owed by the British and Irish bookmaker in relation to Betfair Exchange, which operated in the country until November 2012.
The gambling operator also faced a demand for taxes from 2012, 2013 and 2014 financial years in relation to its paddypower.com interim licence in Greece. Local tax officials believe that the company to be liable for unpaid taxes amounting to €15 million (£13 million), including penalties and interest, which according to reports, is much higher than the total revenue the bookmaker earned in the country.
Paddy Power Betfair Opposes Payment Bills in Both Countries
As mentioned above, Paddy Power Betfair strongly disagrees with both payment orders. The company explained that pending the outcome of the appeals, it paid the overall liability owed to Greek authorities in January 2019. Apart from that, the British bookmaker explained that it is still awaiting some clarity regarding the timing of any cash payment in Germany.
The last few years have been challenging for the company. Like other gambling operators, it was forced to look for options to consolidate its position in the market, after stricter regulatory conditions in the UK made it hard for some gambling companies to survive alone due to what was described as a “hostile” regulatory regime and fierce competition.
As a result of its efforts to bolster its position in the sector, Paddy Power and Betfair merged in 2016 to form a single entity under the conditions of a massive £7-billion deal. Since then, the operator has been aimed at global expansion in order to stay profitable and resist the tougher regulatory environment in the UK.
The British and Irish gambling company has projected that its underlying core earnings will be within the range between £465 and £480 million for the full-year 2018, excluding the losses faced by its recently-merged US sports betting business. The annual results of the bookmaker are expected to be officially published on March 6th.