Tax Surprise for GVC Holdings in Greece
Greek tax auditors handed a surprisingly high tax bill to the GVC Holdings online sports booking brand after a recent tax audit. The recipient of the €186.77 million tax bill is Sportingbet, which GVC acquired in 2013.
This could force the gambling operator to pay close to a quarter of the entire revenue of the group for 2016, which stands at €843 million. Based in the Isla of Man, GVC released a statement on Thursday revealing the content of the review performed by Greek Audit Center for Large Enterprises.
William Hill, a rival of GVC, managed to acquire all Spanish and Australian operations of Sportingbet, while GVC purchased the rest of Sportingbet in 2013. According to a statement released by the gambling operator, the Greek audit authority tax bill regarded the period between 2010 and 2011. This coincides with the period before GVC took over the Sportingbet brand.
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. Surprisingly, GVC was not the only gambling operator to receive a high tax bill from the Greek tax authority.
In its recent statement, GVC explained the tax estimate was higher than what revenue Sportingbet had generated over the previously mentioned period. The company stated its board called out the controversy in the Greek assessment calculation. They regard it as widely exaggerated.
GVC Plans to Take Action
GVC has obtained both tax and legal counseling by their advisers from Greece. The company considers disputing the authority’s tax assessment in court. If this matter goes to court, Greek court will deal with the appeal process.
The ultimate result was an agreement between the Greek Audit Center for Large Enterprises and the operator. The agreement constitutes the operator will make monthly payments of €7.8 million over a period of two years. The money will remain in a special account while GVC prepares its appeal of the tax bill. This is part of an agreement with the tax authority. GVC has also prepared €200 million as a financial provision to cover the entire tax bill.
Another GVC plan to takeover one of their
rivals is not affected by the current tax situation in Greece. GVC’s plans to takeover of Ladbrokes Coral, another gambling operator, became more realistic after the company continued the talks of an acquisition. The discussion resulted in a preliminary arrangement for a price of £4 billion.
Both companies have had a long process of pursuing each other. A potential deal to merge almost came to a completion in 2016. This happened in the middle of increasing concerns over the government’s review of the gambling industry in the UK. The main focus of the review were disputed betting terminals with fixed-odds.
One of the largest fixed-odds betting machines operators in the UK, Ladbrokes fears a potential suppression of these betting terminals. This would deal a significant amount of damage to the profits of the operator. The government even confirmed it would crack down on the machines, with MPs announcing that a crackdown might occur at any given time in the future.
This ultimately prompted Ladbrokes Coral to consider merging with GVC, a strong partner in the online gambling industry. This would help the company offset its losses that would be the result of a reduction in fixed-odds betting terminals max bet.
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