Nasty Greek tax surprise for GVC Holdings

GVC Holdings plc, currently involved in the GBP 4 billion acquisition of Ladbrokes Coral, was temporarily distracted Thursday when the Greek taxman demanded Euro 186..77 million in 2010-2011 taxes it claims are due on the Greek operations of Sportingbet, now a GVC subsidiary (but not back then – GVC acquired the company in 2013).

In a stock exchange advisory, GVC said that it had taken expert legal advice and believes it has strong grounds to appeal the assessment and intends to do so. Unfortunately, it appears that there are no settlement mechanisms in the Greek tax system, which means the issue will have to be decided by the courts, which could take some time.

In the interim, GVC is taking the precaution of setting aside Euro 200 million as a contingency, and will seek to reach an accommodation with the Greek tax authorities through which it will pay an agreed monthly amount on the understanding that it not an admission of liability, and that it will be refunded in the event of a positive legal outcome.

Such an arrangement would enable Sportingbet to continue trading in Greece whilst the issue is resolved.

The GVC advisory notes that the Greek tax claim is “substantially higher by multiples of the total Greek revenue generated by the subsidiary.”

“This is a spurious and opportunistic claim made on the background of a Greek government desperate to pay its debts to the IMF,” a person close to the company’s leadership told the FT, adding the Greek tax claim will have no impact on completing the Ladbrokes Coral takeover.

A Ladbrokes spokesman said: “We performed tax and regulatory due diligence on GVC’s international operations, including use of third party advice. We remain confident in the views we formed at the time of the deal.”

The GVC board of directors strongly disputes the basis of the Assessment calculation, believing the assessed quantum to be widely exaggerated, the advisory notes, adding that the directors are confident in the grounds of appeal.

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