ZEAL Network SE set for €56m payout after myLotto24 wins tax row court case

ZEAL Network SE subsidiary myLotto24 wins German court case
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German online lottery provider ZEAL Network SE will be reimbursed with interest after its wholly-owned subsidiary myLotto24 emerged victorious in the Federal Fiscal Court this week.

The case derives from a 2019 dispute between myLotto24 and the tax authority (Finanzamt) Hannover-Nord which, according to Bloomberg, saw the online lottery platform pay €54m in VAT in January 2020.

The duo entered into an agreement that ‘eliminated the risk of potential fines for late payment of taxes and significantly reduced the amount of potential interest payments’.

The Fiscal Court of Hanover (Finanzgericht Hannover) ruled in November 2019 to uphold the appeal by myLotto24 against the assessment of VAT, a decision subsequently appealed by the tax authority.

However, the German Federal Fiscal Court (Bundesfinanzhof) has now rejected the tax authority’s appeal with ‘final effect’ which, in turn, will trigger the repayment of €52m to myLotto24.

The payment is expected to be made in the ‘coming weeks’, while myLotto24 will also be entitled to interest of around €1.8m.

The payments will have no impact on ZEAL’s income statement, as the corresponding receivable was already recognised as other assets.

A ZEAL Network SE statement read: “As a result of the successful conclusion of the tax litigation, ZEAL will have additional free liquidity of around €56m available.

“We will assess the extent to which it makes sense to use these funds in the coming years for operational purposes, including business expansion.

“In addition, a distribution to shareholders in the form of dividends or by way of a share buyback programme is also possible. Any such measures would be announced separately.”

Meanwhile, this week, ZEAL Network SE reported revenue and profit growth for the first half of 2022 amid more favourable market conditions and a focus on a high-margin product mix.