Bonn, 21 September 2022. In its rulings handed down in three cases, the Federal Administrative Court in Leipzig held a municipal betting office tax to be inadmissible. It ruled in favour of the company plaintiffs and against the city of Dortmund.
The court came to the conclusion that the levying of an (additional) municipal tax on betting offices is unallowed because it is similar to the sports betting tax laid down in federal law in the German Racing and Lotteries Act (Rennwett‑ und Lotteriegesetz). This is among those special federal taxes which preclude the levying of a municipal expenditure tax on the same subject. The basis for this ruling was a decision rendered by the Federal Constitutional Court on the admissibility of a municipal tax on overnight stays on 22 March 2022 (1 BvR 2868/15 et al.).
The city of Dortmund introduced a municipal expense levy in 2014 to tax the brokering or organising of horse and sports betting in betting shops. The basis of assessment was the event area, which was spelled out in more precise terms. The Federal Administrative Court criticised this in 2017, deeming that a betting office tax based on a geographic area as a standard violated the principle of equality in tax treatment. The city thereupon retroactively amended its statutes, subsequently setting 3% of the gross betting stake as the tax rate. Münster Superior Administrative Court (Oberverwaltungsgericht Münster) allowed the dismissed action to be appealed in order to clarify the question of whether the levying of a tax on betting offices following the amendment of local statutes is unallowed due to the similarity to federally regulated taxes in the Racing and Lotteries Act.
The Redeker Sellner Dahs attorney Dr Klaus Walpert acted as counsel for one of the plaintiffs, which runs a betting office in the Dortmund area. He assesses the ruling as follows: “There have been considerable doubts about the admissibility of the tax for various reasons ever since its introduction in 2014. The Federal Administrative Court has now applied an aspect that became obvious after the 'bed tax decision' issued by the High Court in Karlsruhe. It is now clear that a double burden may not be imposed in the form of a racing and sports betting tax and a betting office tax.”