UK-listed online gambling operator GVC Holdings is putting aside €200m as a provision against a hefty back-tax demand from the Greek government.
On Thursday, GVC announced that it had received a tax audit assessment from the Greek Audit Center for Large Enterprises, which is demanding €186.77m in back taxes to cover a GVC subsidiary’s activity in the Greek market for the years 2010 and 2011.
The GVC subsidiary in question was owned during the period by Sportingbet, whose operations GVC acquired in 2013 as part of a joint deal with rival bookmaker William Hill. At the time, Sportingbet held an interim Greek license, the permanent replacements for which have been still not been issued by Greek authorities.
GVC says the nine-figure back-tax demand is “substantially higher by multiples of the total Greek revenues generated” by Sportingbet during the period in question. GVC disputed the Greek taxman’s methodology for arriving at this “widely exaggerated” figure, while noting that “multiple other online gaming operators” had been subjected to similar demands.
There is no formal settlement mechanism for resolving differences of opinion, and thus GVC’s legal and tax professionals have advised the company to challenge the tax grab in Greek courts.
In the meantime, GVC is willing to play nice with the Greek taxman in order to ensure its Greek-facing operations aren’t disrupted. As such, GVC will pay a monthly sum of approximately €7.8m for the next 24 months to be held on account, which will require GVC to make a €200m provision on its 2017 financial accounts.
GVC insists that its willingness to put this money aside is not an admission that the Greek demand has merit, and the company expressed confidence that it will ultimately prevail in court.
The Financial Times quoted an unidentified figure close to GVC’s corridors of power calling the tax demand “a spurious and opportunistic claim made on the background of a Greek government desperate to pay its debts to the [International Monetary Fund].”
The same source added that the provision would have no effect on GVC’s pending deal to acquire rival Ladbrokes Coral Group. The latter company issued a statement saying it had performed tax and regulatory due diligence prior to the Greek tax grab, and “we remain confident in the views we formed at the time of the deal.”
In other GVC news, former Bwin.party CEO Norbert Teufelberger’s two-year term as a non-executive director of GVC concludes on February 2, after which Teufelberger will step down from the role. GVC officially acquired Bwin.party in early 2016, and has since whipped the underperforming Bwin.party brands into fighting shape.
