The government has proposed a 15% tax on gambling winnings as part of its draft fiscal strategy and amendments to the personal income tax law, with an anticipated annual revenue of €5 million for the state budget.
The Gambling Operators’ Association, affiliated with the Chamber of Commerce, has expressed concerns about this proposal to the Ministry of Finance. They argue that similar measures in other jurisdictions suggest this tax could lead to a 30% drop in payments from licensed gambling operators, which would, in turn, reduce the state’s revenue from gaming fees. They recommend that the proposal be reconsidered.
Currently, the state earns approximately €22 million annually from gambling concessions, a figure that has been steadily increasing.
Failed attempt in 2014
In December 2014, the Montenegrin Parliament approved a similar tax measure proposed by a group of DPS (Democratic Party of Socialists) deputies, intended to take effect from January 1, 2015. However, due to the Ministry of Finance’s failure to issue necessary subordinate regulations, the tax was never implemented.
As a result, gambling operators did not deduct this tax from players’ winnings in 2015. In December 2015, the Parliament repealed the tax on gambling winnings. During the debate, a petition with 18,000 signatures opposing the tax was submitted, marking one of the largest petitions ever organized.
Now, nine years later, the new government is attempting to reintroduce the tax in a similar fashion. The proposed tax would be based on all winnings, calculated as the difference between the wager and the payout. Gambling operators would be responsible for calculating and withholding the tax, deducting it from players’ winnings.
The tax would be calculated and withheld by gambling operators with each payout and submitted to the authorities by the next working day, as outlined in the draft personal income tax law, which was open for public comment until August 8.
This tax is part of a broader set of measures the government is considering to offset an estimated €280 million loss from planned reductions in pension contributions.
The Gambling Operators’ Association believes the proposal should be abandoned, citing concerns that it will drive revenue to the black market and foreign online operators, where players will not see reduced winnings due to the tax.
They argue that implementing this tax could negatively impact overall gambling revenue and reduce state income from variable gaming fees. They predict that the tax will lead to significant revenue loss, outweighing any benefits from the personal income tax increase.
Technical and legal concerns
The Association has raised issues with the technical application of the proposed tax and noted conflicts between the new tax law and the existing Gambling Act. They emphasize the need for clear definitions of “winnings” and “wagering” to avoid complications in tax calculation.
They also point out that different forms of gambling—such as casinos, slot machines, betting shops, and lottery games—treat wagers differently, creating challenges in calculating the total amount wagered. The lack of a clear definition for “wager” and the timing of these calculations complicates the implementation of the new tax.
Regional and EU practices
In neighboring countries like Croatia and the Federation of Bosnia and Herzegovina, a tax on gambling winnings has been in place for over a decade. In Croatia, small winnings under €100 are exempt, while in the Federation, winnings under 100 marks (€50.5) are also exempt. Both jurisdictions have reported a decrease in revenue following the introduction of these taxes.
In the Republic of Srpska, there is no such tax, leading some operators in the Federation to lose players to online platforms not subject to the tax. Croatia applies varying tax rates on lottery and betting winnings, with rates ranging from 10% to 30% depending on the amount.
The EU does not have a standardized approach to gambling taxation, allowing member states to establish their own regulations, which vary significantly in terms of rates and coverage.
