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Online Gambling Lawyer
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Volume: 17 Issue: 5
(May 2018)

spain proposes identity verification tax changes spanish government sent european commission (‘ec 19 april 2018 resolution proposing changes spains

Spain Europe EU

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Spain proposes identity verification and tax changes

The Spanish Government sent to the European Commission (‘EC’) on 19 April 2018 a Resolution proposing changes to Spain’s verification systems used to verify the identity of participants in gambling, and also amendments to the reporting process for the information monitoring system used by online operators, in an attempt to avoid fraud and prevent access by minors to gambling platforms; however the proposals have caused some concern that they will be onerous for operators to implement. Further, the Spanish Government also put foward in April 2018 taxation proposals of note to online gambling operators.

Once the proposed changes are in force - likely to be January 2019, presuming approval from the EC - operators will need to verify all players through means of documentation: players will need to provide an electronic copy of identity documents, such as their Spanish ID card, passport or utility bills. Under the current system, players who hold a Spanish ID card can be verified through the electronic verification system of the Spanish regulator the DGOJ, while only those without a Spanish ID card need to be verified through documental means. Under the proposed changes, operators will also need to check the identity of players holding a Spanish ID card via the ID card database while confirming their identity through documental means too. “The procedure will be much more onerous for operators who will have to allocate resources to guarantee that their systems support this new procedure,” explains Paula Gonzalez de Castejón, Legal Director at DLA Piper, before adding that other changes may also prove onerous for operators: “For example, existing registered players who have a Spanish ID card, whose identity has not been verified using documental means, will be allowed during a transitional period of nine months to deposit - up to a maximum aggregate amount of €150, including previous existing deposits - and play, but not to cash out until their identity has been successfully verified by documental means. For existing registered players who do not hold a Spanish ID card, during the transitional period of nine months the scenario will be even more restrictive, as they will not be allowed to either deposit, play, or cash out without their identity having been verified through documental means. Once the transitional period has elapsed, in case of not being verified by documental means those accounts would have to be cancelled.”

The changes to the identity verification system will apply to existing registered players, as well as to new players, though the aforementioned transitory period is envisioned in order for operators to carry out the new verification process for all players in their databases. Given the changes to the verification system, the information monitoring system used by operators will require updating to refer to whether the identity of each specific player has been verified. “The DGOJ is pushing this change forward in order to increase the reliability of player verification procedures,” note Albert Agustinoy, Partner, and Claudia Ros, Lawyer, of Cuatrecasas. “It is our understanding that the Spanish authorities want to avoid potential cases of access by minors/fraudulent access to gambling platforms as well as to increase controls on the identity of players.” In the opinion of Alla Serebrianskaia, Partner at Asensi Abogados, “The proposed changes are not due to the reaction of the regulator to any major specific problems or important concerns, but rather are an improvement in services, thus reinforcing the protection of the rights of customers and operators.”

Separately, on 3 April 2018, Cristóbal Montoro, the Spanish Minister of Finance and Public Function, announced in Spain’s Congress of Deputies a proposal for taxes on revenue received from fixed-odds sports betting, exchange betting and fixed-odds horseracing revenue, as well as the category of ‘other games’ which includes online casino, poker and bingo, to be lowered from the current 25% to 20%. This taxation amendment is found in Spain’s draft General State Budget Law, with the Spanish Government receiving on 26 April the necessary votes for the draft Bill to continue; a vote on approval is expected in late May or early June this year. However, whether the reduction in taxation will ultimately be approved is unclear, since the Spanish Government does not have a parliamentary majority, and as Serebrianskaia notes, “the atmosphere is surrounded by uncertainty.” Agustinoy and Ros believe though that “the likelier scenario is that the Bill will be passed and, hence, the chances of this tax change coming into force are reasonably high. The new tax regime, if approved, would come into force on 1 July 2018.”

The draft General State Budget Law also includes a proposal to reduce further taxation to 10% GGR for online gambling operators in the Spanish autonomous cities of Ceuta and Melilla. “Many operators holding Spanish online gambling licences are currently based in Gibraltar for tax reasons and because the requirement of being based in the EU is also addressed. Now, with Brexit, those operators should think about moving to other EU territories. With this draft proposal, the Spanish Government is trying to offer an attractive tax regime for those operators who decide to be established in Ceuta or Melilla,” said Gonzalez de Castejón.

However, the draft proposal requires that operators be effectively located in Ceuta or Melilla; as Agustinoy and Ros explain, this is “something that has not been clarified yet by the Spanish authorities but appears to reinforce the need of the relocation not being merely formal but material, i.e. operators locating in those cities the technical and human resources that may be required for the operation of the licensed gambling activity.” Serebrianskaia adds that “as of today, both cities still have limitations in terms of infrastructure, technical means, connections and other relevant aspects valued by gaming operators. In this sense, provided that there are obviously other essential factors that must be considered besides taxes, I believe that there is still work to do in Ceuta and Melilla in order for these places to become potential gaming jurisdictions, at least in the short term.”

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