UK Online Gambling Taxation | Law&Trust International

In this article, we will look at how the organization of online gambling is regulated in the UK. Who should get a license? Only companies registered in the UK or absolutely everyone who advertises such services and provides them to the British?

In order to understand the procedure for taxing operators, we define the terms that we use in this article.

  • Remote Gaming Duty (RGD) is a duty on income from online gambling, introduced in the UK since 2014. The obligation to pay this fee (hereinafter RGD) is governed by the Finance Act 2014.
  • Online game (remote gaming) is a game of chance in order to win a prize online/remotely (for example, via the Internet).
  • United Kingdom (UK - the United Kingdom) - this does not include the Isle of Man, Channel Islands, and Gibraltar.
  • HM Revenue and Customs (hereinafter - HMRC) is the UK tax authority.
  • Remote Operating License (hereinafter - ROL) is a license issued by the UK Gambling Commission (Gambling Commission)
  • Game prize fund or pool - a fund or pool in which all payments for a remote game are generated and from which winnings are paid.

So, let's begin.

In the 2012 budget, the UK government announced that UK gambling taxes would be reformed so that remote gambling would be taxed on a “place of consumption” basis.

Given the new tax regime, remote gambling operators will pay gross gambling profits tax received from British players, regardless of where the operator is located or registered.

Since 2019, the RGD tax rate has been increased from 15% to 21%.

The tax is payable on all game payments received from the British.

Game payments are the sum of any sums paid to you by a person from the UK.

How to determine who is British and who is not and whether he plays your games (UK person)?

  • a person who usually lives in the UK;
  • a corporate body that is legally formed in the UK.

The UK tax authority has clarified how to determine whether a person is a UK person.

1. Game providers must maintain appropriate records so that they can verify that players are residents of the United Kingdom (that is, they usually live in the UK or abroad). Game providers are responsible for keeping their customer (player) location records up to date. These records should be audited by the HMRC.

All game providers must initially require their players to indicate the address at which they usually reside. If no address is provided, the player will be considered as a person from the UK.

2. If a player provides an address outside the UK, game providers must verify the client’s declared location by referring to other information on their systems. It is unacceptable for game providers to simply accept allegations from customers about where they live as an established fact. In cases where the verification system produces a conflicting result, the operator must verify the following data:

  • Bank statement address
  • Credit card address
  • Driving license address
  • Contact phone number and country code attached to it.

Further, if at least 2 points indicated an address in the UK, the operator must consider this person as residing in the UK, regardless of the address provided by the player himself. This is known as the "UK Two Indicators Rule".

Actually, if you enter/already entered/are going to enter the British market, you must immediately register with the tax authority.

Applications for registration must be submitted at least 31 days before the expected date of registration. This period is reduced to 14 days for businesses based in the UK, EU, Gibraltar, the Isle of Man, Norway, the Faroe Islands, Iceland, New Zealand or South Africa.

You must use the online registration system. For RGD, it is not possible to register using the paper form.

You have the right to appoint an agent in the UK who will conduct business on behalf of the company for the payment of fees, taxes, reporting.

Operators also have an obligation to appoint a representative if the operator is not registered in the group (several related companies, one of which is registered in the UK) or you are not in any of the following places:

  • EU;
  • Great Britain (with the exception of the Channel Islands);
  • Norway, Faroe Islands, Iceland, New Zealand or South Africa;
  • In a jurisdiction that has an agreement with the United Kingdom to collect gambling tax arrears for the United Kingdom. Such agreements are in force with Gibraltar and the Isle of Man.

After registration, the operator is required to submit reports. The standard reporting period is 3 whole calendar months starting on the first day of the first month and ending on the last day of the third month. The submission of the report must be carried out no later than 30 days from the end of the period for submission of the report. For late submission, fines are imposed.

How does the government ensure control of all those who play in the British market?

HMRC works together with other tax jurisdictions to collect outstanding tax debts, including through the EU Mutual Assistance in the Recovery of Debt (MARD) directive, as well as in the automatic exchange of information.

Therefore, if you intend to provide services to residents of the UK, you need to get a license, and then enter the huge sector of the UK gambling market.

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