PPB hit with Greek and German tax bills totalling €55m

Paddy Power Betfair has pledged to appeal against legacy tax assessments in Greece and Germany, claiming that the sums being demanded are far greater than revenue generated in either market.

Together, the tax bills add up to €55m. In Germany, the operator is facing a €40m bill, as determined by the Fiscal Court in the state of Hessen.

This follows a failed appeal against a 2012 tax assessment, relating to the Betfair Exchange. The peer-to-peer betting site was active in the country until November 2012, before pulling out of the market as a result of the 5% turnover tax implemented in the State Treaty on Gambling. It originally argued that the tax should not apply to Betfair, as it was not technically an organiser of sports betting, though this was rejected. 

At the time it was estimated that pre-merger Betfair generated around 4% – in the region of £6m before costs – of its total revenue in Germany.

Paddy Power Betfair said that the €40m sum being demanded by the Fiscal Court represents a multiple of revenue generated by the exchange during the assessment period.

In a separate development, the operator has been issued with a Greek tax assessment for the 2012, 2013 and 2014 financial years, relating to PaddyPower.com's Greek interim licence.

This concluded that a total of €15m, including penalties and interest, is owed. However Paddy Power Betfair describes this sum as “substantially higher (by multiples) than the total cumulative revenues ever generated by PaddyPower.com in Greece”.

“The group strongly disputes the basis of these assessments, and in line with the legal and tax advice we have received, is confident in our grounds to appeal,” it said. “We therefore intend to do so.”

Pending the outcome of each appeal, it noted that it had paid the total Greek liability in January this year, and is awaiting clarity on when it must pay the German liability.