GVC Holdings set to challenge €200m Greek legacy tax bill
Online gambling group GVC Holdings has announced that it has been issued a legacy tax bill of almost €200m from the Greek Audit Centre for Large Enterprises.
The bill relates to the performance of its Greek subsidiary between 2010 and 2011, operated at the time by Sportingbet Plc, prior to its acquisition by the group in 2013.
In a statement GVC Holdings said it would contest the tax bill, believing that the quoted figure of €187m is much higher that the revenues generated by the subsidiary during the period.
This led to a 4% drop in the share price of the company on the morning of the announcement.
GVC has consulted with local tax and legal professionals, who have advised that the firm have a strong case to dismiss the figure. Based on this, GVC has stated that it will file an appeal to the Greek courts, as there is no formal settlement mechanism currently available.
However, the group have stated that they will enter into a payment scheme with the Greek Audit authority to enable the subsidiary to continue trading. Funds of around €7.8m per month will be paid to the authority over the next two years. GVC were keen to show that this was only to continue trading and not an admission that the bill was correct, stating:
Entering into such an arrangement is not an admission that the assessment is correct and the Group will seek to recover such payments. The Board strongly disputes the basis of the Assessment calculation, believing the assessed quantum to be widely exaggerated and is confident in the grounds of appeal.– Statement, GVC Holdings
In addition, GVC has sanctioned around €200m as part of its 2017 financial accounts as a provision to cover the payment if necessary.
GVC takeover of Ladbrokes Coral unaffected
The group is currently in negotiations with Ladbrokes Coral over an acquisition of the firm. Both groups are said to be confident that this issue will not affect these negotiations, although Ladbrokes Coral’s share price also fell on the morning of the announcement by around 3.6%.
Both firms have reached an agreement on a takeover figure of between £3.2 £4bn, with the final price heavily dependent on the outcome of the government’s cut to fixed-odds betting terminal (FOBT) stakes, which looks set to be slashed by 98% to a maximum of £2.
The firms reached this agreement in December after negotiations and have also agreed on share capital distributions, with Ladbrokes Coral shareholders retaining around 46.5% of the share capital and GVC shareholders taking around 53.5%.