Global Betting and Gaming Consultants wrote to its clients in April 2015 about concerns in the way international tax trends were heading and the risks to the gambling sector. One of the tax measures GBGC highlighted was that of Permanent Establishment (PE) and as 2016 begins Italy seems to have used PE to try and tackle the offshore e-gaming sector.


Permanent Establishment concerns where a company has a “fixed place of business” for the purpose of determining where taxes should be paid. PE can cover: an office, a branch of a business, deputising of agents to act on behalf of a business or a place of management. There has also been a move to lower the threshold as to what constitutes a place of permanent establishment in these times of government desperation for tax revenues.


The new Budget Law 2015 published in Italy contains several changes for the gambling sector, one of which is aimed at tackling the data transmission centres (CTDs) which operate in the country. CTDs are similar to internet cafes which offer access to gambling websites which are based in offshore jurisdictions within the European Union.
The legality of these CTDs has been the subject of much argument in the European Court of Justice. The Italian government now seems to have adopted a new approach in trying to solve the issue of these CTDs.

Permission for existing CTDs will come to an end in June 2016 to be replaced by a new licensing process for betting outlets that will take place in Q2 2016. If CTD operators do not participate in the new licensing process and bid for licences they will be deemed to have “permanent establishment” in Italy for tax purposes. As such, they will be liable for tax at 25% on every transaction.

This angle of attack opens up a new front in the debate about cross-border services for gambling within the EU. It focuses not on the issue of gambling but rather on that of being liable for tax. It could find support from other governments because, as GBGC described in its original advice, governments around the world are creating schemes “designed to ensure that all company profits are subject to taxation somewhere in the world, with individual governments vying to make sure the profits fall within their jurisdiction. Governments couch it in the terms of “aligning tax principles with business practices”.

Italy’s move fits in exactly with global tax trends. Expect other cash-strapped governments to follow closely how Italy’s new regulatory approach plays out over 2016 and what happens after the existing CTD permissions end in June.

Lorien Pilling, Director, Global Betting and Gaming Consultants


GBGC gambling briefings are part of the GBGC’s Platinum Subscription