PokerStars, purported to be the world’s largest online poker operator with some 50 million registered players, has been accused of fraud and tax evasion on a massive scale between 2009 and 2014.
According to Italian authorities, the tax fraud was run through Malta and the Isle of Man, to the detriment of the Italian tax authorities.
Rome’s finance police (the Guardia di Finanza del Comando Provinciale di Roma) said yesterday that PokerStars’ managing director has been accused of fraud and tax evasion to the tune of €300 million.
The massive tax evasion, according to the Italian authorities, dealt with earnings accrued in Italy, which were surreptitiously moved to Malta and the Isle of Man – jurisdictions that are more favourable in terms of taxation on the gaming sector.
Some €300 million worth of revenue that was earned in Italy, which should have been taxable in that country, went undeclared by PokerStars, Italian investigators said yesterday. The allegations come following an investigation, dubbed operation ‘All-In’, which analysed the real value of transactions linked to Halfords Media Italy, the group’s subsidiary Italian branch.
According to the Italian authorities, Halfords media hid taxable income by decreasing the value of services rendered to its parent company, PokerStars. In so doing, it managed to move the taxable income PokerStars earned in Italy to Malta and the Isle of Man.
Italian authorities allege that Halfords Media purposefully misreported part of its revenues in order to avoid Italy’s high taxation on gambling services. To do so, the investigators believe that the company has used transfer pricing methods to move its income the more fiscally convenient Malta and Isle of Man while keeping the costs in Italy.
In 2012, PokerStars received a Malta Gaming Authority licence for its pokerstars.eu website, which is dedicated to the European market.
At the time PokerStars had said, “We expect our Malta license will immediately benefit players who have told us they want to share in the benefits - such as clarity around taxation - that some jurisdictions offer to sites with a license from European Union nations."
In addition to Malta, PokerStars holds licenses in Belgium, France, Italy, Estonia, Denmark and the Isle of Man.
PokerStars denies wrongdoing
Speaking yesterday, PokerStars Head of Corporate Communication Eric Hollreiser was reported as saying the company was confident that the issue will be resolved soon since “PokerStars has been working with Italian tax authorities since they launched an audit several years ago”.
Mr Hollreiser also assured that the investigation would not affect the functioning of its online ‘poker room’ as the company's operations will “continue as usual on www.pokerstars.it, and we remain focused on delivering the most popular online poker service in the Italian market”.
“PokerStars has been working with Italian tax authorities since they launched an audit several years ago," Mr Hollreiser added. “We have operated in compliance with the applicable local tax regulations and have paid €120 million over the period covered by the audit.
“Like many other global e-commerce companies, we vigorously dispute the stance of the tax authority regarding local establishment. The audit is ongoing and we hope to resolve the issue in our favour soon. In the meantime, our operations continue as usual on www.pokerstars.it and we remain focused on delivering the most popular online poker service in the Italian market.”