ESTONIA Trends and Developments Contributed by: Karolina Ullman, Triin Kaurson, Linell Raud and Felix Raidmäe, NJORD Law Firm
The Continuing Popularity of the Estonian Gambling Licence Amid Increased Scrutiny and a Decreasing Gambling Tax Rate General developments Increased level of attention in the media Over the past year, there has been a notable surge in public discourse concerning gambling operators and the associated risks of their activities. This discussion has not only focused on the implications for Estonia’s reputation as a business-friendly environment but has also highlighted broader societal concerns. The media has played a pivotal role in amplifying these discus- sions, bringing to light various facets of the gambling industry that were previously under-explored. At the beginning of the year, a significant political development occurred when one of the elected par- ties in the Riigikogu, Estonia’s parliament, proposed reversing the planned increase in the gambling tax rate. Instead, they suggested a decrease, aiming to enhance Estonia’s attractiveness to gambling com- panies. This proposal sparked a swift response from the Financial Intelligence Unit (FIU), which is tasked with overseeing Anti-Money Laundering (AML) and Coun- tering the Financing of Terrorism (CFT) matters. The FIU promptly highlighted the potential risks associat- ed with such a move, emphasising the need for careful consideration of the broader implications. The media’s attention to this subject has been relent- less, with journalists actively seeking opinions from the public and various authorities. Their investigative efforts have gone beyond mere reporting; they have attempted to open accounts, conduct test payments, and scrutinise the operational procedures and share- holdings of companies operating under an Estonian licence. This comprehensive approach has contribut- ed to a more informed public discourse and has pres- sured stakeholders to address the underlying issues. Increased level of reviews by Tax and Customs Board The Tax and Customs Board, the regulator for gam- bling, has long been recognised for its diligence in reviewing submitted documentation from gambling operators. However, recent months have witnessed
a significant intensification in the thoroughness of these reviews. Previously, the regulator would typically request amendments only in cases of major errors. This approach has evolved, with the regulator now adopting a more meticulous stance, scrutinising even minor details. In practice, this heightened level of review has resulted in more detailed feedback than ever before. The inter- pretation of the law has become increasingly restric- tive, prompting gambling operators to reassess their systems and procedures. Even those with previously approved systems have found themselves needing to make adjustments in response to new applications and related reviews by the regulator. The process has become more iterative, with opera- tors often undergoing several rounds of follow-up questions or amendments. This is true even for seem- ingly straightforward processes, such as adding a new brand or updating terms and conditions (T&Cs). The increased scrutiny reflects a broader trend towards ensuring compliance and maintaining the integrity of the gambling sector. Decrease of gambling tax rate? Historically, Estonia’s gambling tax rate was set at 5%. In 2024, a decision was made to increase the rate to 6% in 2025, with a further increase to 7% planned for 2026. This was intended to generate additional rev- enue for the state. However, the anticipated revenue boost did not materialise as expected, prompting a re-evaluation of the tax strategy. The Finance Committee of the Riigikogu (the Esto- nian Parliament) has since introduced draft legisla- tion aimed at gradually reducing the gambling tax rate from 6% to 4%, decreasing by 0.5% per year. This amendment proposes that the tax rate will not increase to 7% in 2026 but will instead decrease to 5.5%. The Committee’s rationale is to ensure Estonia remains competitive in the global tax landscape and maintains a favourable business environment. The Committee has acknowledged that previous amendments demonstrated that merely increasing the tax rate does not guarantee the expected additional revenue. Moreover, it may diminish Estonia’s attrac-
175 CHAMBERS.COM
Powered by FlippingBook