Betsson believes that Germany will soon force gaming companies to be licensed, and that only 20 licences will be available, the company said.
The gaming company will therefore pay the historic taxes and will begin to submit monthly tax returns in Germany, "in order to avoid negative repercussions when applying for a licence in the future", it said. It will, however, also legally challenge the liability.
German sports betting tax amounts to 5% of German players' stakes, Betsson said.
"Betsson takes the position that Germany is not entitled to tax companies domiciled in another EU state that do not have any operations in Germany. Betsson therefore still believes it is not subject to a tax liability, but it is choosing to declare in order to prevent being differentiated from other companies which have applied or will apply for a licence," it said.
Betfair pulled out of the German market when the tax was introduced in July 2012, saying that it would make its current exchange model unviable.
"Betfair believes that, in regard to bets placed on its exchange, it is not an organiser of sports betting under the tax law and is not, therefore, liable for the tax," it said.
However, after failing to agree with with the German tax authorities on the interpretation of the law and how it applies to exchanges, Betfair "decided to withdraw its exchange product from the German market", it said.