Flutter Entertainment has confirmed to iGaming Expert that it will be relocating several commercial and marketing roles to Malta, a move that may reflect on the Labour government’s rumoured plans to increase tax intake from the gambling industry.
The news comes as the gambling industry is one week away from discovering if it will be subject to a tax increase through the UK government’s autumn budget, one that has been widely speculated for several months.
However, as Remote Gambling Duty is set to spike, Flutter’s decision to relocate Sky Bet from the UK to Malta will see the firm significantly reduce its corporation tax bill.
Independent estimates from the Tax Policy Associates revealed that the operator could cut its bill by up to £31m annually, with corporation tax in Malta sitting at 5% compared to the UK’s rate of 25%.
It also detailed that the firm will make significant savings from its marketing portfolio, as it gains the ability to join an EU VAT Group, Normally, gambling services in the UK are exempt from VAT, but shifting to Malta halts irrecoverable VAT for Sky Bet, which is huge as a result of the group’s lucrative marketing spend.
Joining an EU VAT group, according to Dan Neidle (Tax Policy Associates), could see the firm save almost as much as it is saving in corporation tax – £20m–£24m per year.
The decision has moved the needle in Westminster and will cause nervousness amongst the government. During Prime Minister’s Questions this afternoon, Liberal Democrat Leader Ed Davey put the case to the PM that more needs to be done to stop online gambling firms avoiding corporation tax.
Starmer failed to answer the question with any conviction, perhaps speaking to the efficiency of PMQs when it comes to shining a light on government policy – or the lack thereof.
However, what it does highlight is that UK policymakers and legislators are aware of the avenues being explored to cut the tax bill by the gambling sector.
“Flutter paid more than £700m in taxes to HMRC last year and we employ over 5,000 people across the UK, including almost 2,000 in Leeds and 600 in Sunderland,” a Flutter UKI spokesperson told iGaming Expert.
“As with most global businesses around the world, we are constantly striving to remain competitive and efficient and to give ourselves the best chance of success in an incredibly challenging environment.
“The challenge we face is only made harder by the recent Gambling Act Review, the significant rise of illegal, unregulated black-market competitors and the possibility of tax rises in the Budget.”
According to ITV News, Flutter’s employees across its UK and Ireland operations were told that the relocation to Malta was due to a “need to operate more efficiently” and to reduce costs.
The relocation follows Flutter’s decision to make close to 250 people redundant across its UK and Ireland operations back in June.
At the time, iGaming Expert was told that the decision was said to be part of a broader strategy to migrate its brands onto a single tech platform, as well as “against the backdrop of increasing cost and regulatory pressure”.
Flutter has made it clear that despite the move, it will continue to be a contributor to the UK economy.
The Flutter UKI spokesperson added: “In June this year, after migrating Sky Bet onto the same technology platform as our other brands, we decided to move a number of commercial and marketing roles to our commercial centre in Malta – where Flutter already employs over 750 people.
“This decision was made for a number of strategic and commercial reasons and will have some tax implications. But Flutter is committed to the UK and Sky Bet will continue to pay UK corporation tax on its profits.”
Tax hike impact
With potential tax increases for the UK gambling industry on the horizon, plenty of stakeholders have expressed the possible impact hikes could have on their operations.
Rank Group Chief Executive John O’Reilly said in October that the group is paying its “fair share” in tax, adding that the operator has been in talks with the Treasury about the impact an increase could have on its operations.
O’Reilly said: “Speculation regarding tax changes in the upcoming budget is, inevitably, hanging over the business. We are engaged with the Treasury on the implications of tax changes on the viability of our venues, employment levels, future investment and the customer.
“Last year the group generated £44.6m in profit after tax, having paid HMRC and local authorities £188m in taxes. The Rank Group, with its strong UK focus, is certainly paying its fair share.”
The Betting and Gaming Council (BGC) has been pushing back as well, recently publishing a report by PricewaterhouseCoopers LLP, produced on behalf of the BGC, that said a tax increase could lead to operators’ prices increasing and less money being spent on marketing and bonuses, leading to players switching to unlicensed operators.
In a recent Treasury Committee parliamentary hearing, BGC CEO Grainne Hurst argued against tax increases, stating: “The industry has a lot of regulations in place voluntarily and the white paper to raise those standards. We track behavioural triggers, late-night play, chasing losses, so we make sure players are staying within the regulated space.”
Operators Entain and evoke have also stated that they would reevaluate their investment strategy in the market if changes to the gambling tax were to occur.
