The Dutch government is reimbursing millions to poker players who won money on PokerStars’s E.U. client since 2012. This is the result of a long-running court case on whether these winnings were taxable.
The matter hinged on whether PokerStars.eu was actually located in E.U. or not. A matter that turned out to be more complex than simply looking at the end of their URL.
The Netherlands might well be known for its famously (or infamously) lax rules on drugs and prostitution, but its position on gambling is a little tighter.
As with all laws in this area, the hazarding money on games of skill and games of chance are held to be different things in the eyes of Johnny Law. Since 1964, the Netherlands has considered poker a form of gambling. Since then, Dutch poker players have to pay a monthly tax on their “gambling” winnings. Given that this tax is a flat 30.1%, that makes for a significant vig on player profits.
But in 2015, the Supreme Court ruled that poker players were exempt from this tax, provided they were playing on an E.U. based site. The decision was based on the fact that the tax violates E.U. law.
This is where things began to get tangled.
No man is an island
In 2012, PokerStars.eu migrated from the Isle of Man to Malta.
This is important because, although the Isle of Man is a Crown dependency of the U.K. (which was part of the E.U. until NYE 2020), IOM was never itself part of the E.U.
Given that Malta is in the E.U., players on the PokerStars client felt that they should have been exempt from the monthly tax. But they weren’t. They didn’t fold, and in 2015, players went to the bar and the Supreme Court deemed PokerStars’s to be located in the Isle of Man. Since this put PokerStars utside the E.U. The Dutch Belastingdienst kept raking in the dosh.
The lawyer Pepijn Le Heux took on the tax authorities on behalf of a number of poker players. The Netherlands court system is a touch messy and in the resulting bounding between courts, Le Heux ended up getting contradictory rulings.
In the end, it came down to the tax authorities themselves and how they dealt with the two rulings. They decided to sign settlements with the 130-ish plaintiffs and ruled that PokerStars.eu was based in Malta.
However, PokerStars.fr was still considered to be based in the Isle of Man. Players on the latter site are still due to cough up their taxes on the first of each month.
One final twist in the tale is that while the tax authorities have had to turn off the money hose from PokerStars players, a new hose opened up on January 1st, 2021 when the U.K. left the E.U., taking with it several sites based there, including 888poker.
Image source: Flickr