On 17 September 2024, which was Budget Day (in Dutch: Prinsjesdag) in the Netherlands, the Dutch Ministry of Finance presented the Dutch State Budget 2025 to the Parliament, including legislative proposals for the Tax Plan 2025. One of the proposals is to gradually increase the Dutch Betting and Gaming tax (BGT) from the current rate of 30.5% to 34.2% in 2025 and to 37.8% in 2026.
In May of 2024, the Dutch coalition parties PVV, VVD, NSC and BBB published their outline agreement (in Dutch: Hoofdlijnenakkoord) on the policy direction for 2024 – 2028. The BGT will be increased for budgetary purposes. Forecasts included in the budgetary annex to the outline agreement show that government revenues are expected to structurally increase by EUR 202 million per year. To enable the Dutch betting and gaming industry to prepare for a 7.3 per cent point increase in the BGT rate, the coalition intends to adopt a two-step approach and increase the BGT rate over a two-year period, as described in the Explanatory Memorandum of the Tax Plan 2025. The Tax Plan 2025 projects that for 2025 the two-step approach could result in a one-off reduction of government revenues by EUR 100 million compared to the forecast in the budgetary annex of the outline agreement.
Several organisations are concerned about the impact of the proposed BGT rate increase. The regulated gambling industry represented by Dutch gambling industry associations (NOGA, VAN Kansspelen and VNLOK) consider the coalition’s ambition to increase the BGT rate an “irresponsible gamble”. The industry associations warn the coalition of the adverse effects on the regulated gambling industry in the Netherlands. The industry associations foresee a further reduction of regulated gambling services offered in the Netherlands because legal online casinos would decide to leave the Netherlands. This could potentially impact the forecasted structural increase in government revenues. They also expect illegal gambling to flourish as a result of the increase in the BGT rate, including an increased risk of money-laundering practices. The industry associations encourage the coalition parties to engage with industry stakeholders to design a solution that is in the best interest of the government, industry and citizens. The proposed BGT increase, in addition to other legislative factors, have already made gambling company Tombola reconsider its position in the Netherlands; the gambling company announced it will discontinue its activities in the Netherlands.
The Dutch sport organisation NOC*NSF also expressed their concerns about the possible BGT rate increase. The organisation flags that more than 75 sport associations and about 25,000 member associations and many athletes could be impacted by the coalition’s BGT plans. NOC*NSF’s main sources of income are subsidies, sponsorships and an annual contribution from state-owned lottery NLO (in Dutch: Nederlandse Loterij). NLO holds a license that is granted by the Netherlands Gaming Authority (in Dutch: Nederlandse Kansspelautoriteit) for organising lotteries. As per the license NOC*NSF annually receives a fixed percentage of NLO’s gross revenues from lotteries after deduction of all costs. From 2021 to 2024, NOC*NSF received approximately EUR 50 million annually. NOC*NSF expects NLO’s revenues to decrease as a result of the proposed increase of the BGT rate and estimates a reduction of the annual contribution they receive from NLO by approximately EUR 12.5 million.
To address the concerns about increasing the BGT rate the House of Representatives (HoR) already debated options to explore a BGT rate differentiation approach during the Tax Budget 2024 discussions. The HoR adopted a motion to examine the possibilities for using a different BGT rate for lotteries than for high-risk games of chance (so-called rate differentiation). Although the coalition elaborates on introducing rate differentiation to the BGT In Tax Plan 2025, they conclude that at this stage rate differentiation cannot be implemented (due to the character of the BGT and a potential state aid risk) and further research is required. BGT rate differentiation is not part of the coalition’s BGT plans included in Tax Plan 2025.
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Ivo Ijzerman, Bird & Bird
ivo.ijzerman@twobirds.com
