PokerStars Accused of Tax Fraud in Italy

PokerStars, now owned by Amaya Gaming, has been accused by the Italy’s Guardia di Finanza of “willfully eroding” Italian generated revenues to offshore jurisdictions such as the Isle of Man and Malta. The company is now being investigated for fraud in Italy.

Italy’s financial police have begun an investigation into PokerStars’ Italian business branch Halfords Media Italy, saying the company hid more than €300 million on taxable revenues.

Italy’s Guardia di Finanza claims that PokerStars were using illegal practices such as “transfer pricing”, which involves the manipulating of the price of service and costs in order to decrease taxes charges on income generated.

PokerStars denied any wrongdoing.

“PokerStars has been working with Italian tax authorities since they launched an audit several years ago,” the company said in a press statement. “We have operated in compliance with the applicable local tax regulations and have paid €120m in local taxes over the period covered by the audit. Like many other global ecommerce companies, we vigorously dispute the stance of the tax authority regarding local establishment.

Amaya Gaming owners of PokerStars issued a statement saying that it had been aware of the ongoing tax dispute

“The tax dispute relates to operations of PokerStars dating from before the acquisition of the company by Amaya in August, 2014,” the statement said. “The merger agreement related to that transaction provides remedies to address certain income tax and other liabilities that might occur post-closing but stemming from operations prior to the date of acquisition, including monies held in escrow as initial sources for indemnification.

“The current tax dispute is something Amaya was aware of prior to the transaction,” the statement said. “Amaya does not anticipate that these tax issues would apply to future fiscal periods. The company’s operations continue as usual on and it remains focused on delivering the most popular online poker service in the Italian market.”