Out-Law News 1 min. read

UK horse racing levy cleared as being in line with EU state aid rules


The European Commission has approved a new UK tax framework that is designed to support the country's horse racing and equine sector.

The Commission said the newly-framed UK horse racing levy is in line with EU state aid rules.

When the new levy is introduced gambling operators that accept bets on horse races in the UK will pay a 10% tax on the 'gross gambling yield' on those bets where that yield exceeds £500,000 a year.

The new levy will apply to online betting companies based overseas for the first time. The levy has until now only applied to British-based betting operators.

The Commission said it had approved the new levy because "it recognises that it is essential for the improvement of horse breeding and horseracing without giving rise to undue distortions of competition". It said the levy "also creates a level playing field among betting operators while at the same time supporting entry of new operators and the development of competition between betting operators, thanks to the de minimis [£500,000] threshold".

The horse racing levy has been in place since 1961. The rate of the levy has been the subject of intensely negotiated annual agreement between British bookmakers and the horse racing industry for many years.

The UK government decided it would legislate to provide for a reformed horse racing levy last year. It prepared new regulations for that purpose earlier this year. The regulations, however, were conditional on state aid approval taking place prior to 1 April. An alternative levy system, the 56th Levy Scheme, is therefore currently in place and will stand until 31 March 2018 unless the government introduces new regulations before then.

Nick Rust, chief executive of the British Horseracing Authority, said: "With the final, outstanding approval now secured from the European Commission, today marks one of the last few steps in the process of securing a fair return from all betting on our sport. We look forward to receiving confirmation shortly from government of when the new legislation will take effect."

"We look forward to working closely with bookmakers to build an exciting future for both our industries. The new levy has the potential to put an end to unnecessary divisions between racing and betting as it creates a level playing field, removes the need for annual negotiations on the rate and provides long-term certainty for both parties," Rust said.

Gambling law expert Christopher Rees-Gay of Pinsent Masons, the law firm behind Out-Law.com, said: "Even though the European Commission has confirmed that the regulations are in line with EU state aid rules, opponents of the reforms foresee that these changes will be subject to legal challenge. Only time will confirm if this is the case."

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