Gaming Tax for Casinos – Court Decisions

March 6, 2024

Last week the Supreme Court of The Netherlands has ruled on the appeals of two casinos in Bonaire, Caribbean Netherlands with regard to the taxable base of the gaming tax (in Dutch: “speelvergunningsrecht”). Although the decisions regard the tax position of casinos in Bonaire, Caribbean Netherlands, the legislation in other jurisdictions of the Dutch Caribbean islands is quite similar and the court decisions may have a broader impact.

The Supreme Court in the Netherlands accepted the interpretation of the legislation dealing with the gaming tax imposed on the casinos with regard to the slot machines used. The gaming tax is based on the National Ordinance Gaming Tax and imposed on the gross revenues of slot machines.

Due to a misinterpretation of the legislation one of the casinos had received approval in writing from the responsible tax inspector based on which they were allowed to use the win of the slot machine as a taxable base for the gaming tax, which interpretation was later withdrawn by the tax inspector in both cases. The casino which provided a confirmation in writing was however allowed to use the method above based on the principle of trust.

For slot machines without a bill acceptor, the gross revenue was calculated as the “bucket drop” of the machine, i.e.. the net intake of the machine without taking into account the reinvested winnings. With a bill acceptor, the literal bucket inside the machine was abolished and thus it was more difficult to administer the bucket drop. Therefore, either the bill drop (the gross intake of the slot machine) or the win should be taken into account as an alternative for the “gross revenue”.

If the bill drop is the taxable base, the re-invested winnings are also included in the gross revenue. Therefore, in Bonaire, Caribbean Netherlands, taking the win (the actual winnings of the players) into account as the gross revenue was agreed upon between one of the casinos and the tax inspector. In Aruba the tax authorities have published on their website that they allow casinos to calculate the gaming tax on the basis of the win with a factor of 1.55 as an alternative for the bucket drop.

The decision of the court confirms that the tax authorities in Bonaire are allowed to take the bill drop into account as taxable base for gaming tax purposes. This will lead to a large increase in the gaming tax withheld.

Please note that currently the other Dutch Caribbean jurisdictions allow for different methods of calculation but may want to adopt the outcome of the case law as the new taxable base of the gaming tax, whereby in the situation of Aruba with published policies on the website, the tax authorities will actively need to change their policies, but other jurisdictions with less clear published policies may be affected with even less notice.

Please note that HBN Law & Tax is happy to further discuss the consequences of this case law for your company in Bonaire, Caribbean Netherlands as well as the other Dutch Caribbean jurisdictions.