Betfair moving to Gibraltar to save £20million a year on taxes

GIBRALTAR (Agencies) Betfair, the world's largest betting exchange, is moving part of its business to Gibraltar to cut its tax burden by a reported £20,000,000 a year. Founded 10 years ago by one-time professional gambler Andrew Black and former JP Morgan derivatives trader Ed Wray, Betfair said it expected to save 20 million pounds a year as a result of the switch, which will see its betting exchange operate under a Gibraltar licence from Wednesday. Betfair currently pays 15 percent tax on gross profit from betting, but this will drop to 1 percent following the move. According to CEO David Yu, the company is seeking to avoid the 'double taxation' it faces paying in the UK>

"When you look at how the UK does their taxation, it's based on all revenues rather than where the customer is located. For example, if you're paying tax to a local jurisdiction it doesn't really work to have a case where you're double taxed both in the UK as well as the other jurisdiction," said Yo at an interview.

The British government is reviewing its licensing system for gambling companies following the decision of the country's two biggest bookmakers William Hill and Ladbrokes to relocate their businesses to Gibraltar in order to pay less in taxes.

The move comes as part of a wider restructuring, as the group has moved key technical equipment and 120 staff to new offices in Gibraltar and Dublin.

Betfair said the initial tax savings will be partially offset by higher operational costs arising from running the new offices in parallel with existing ones. This will come down as the offices are consolidated in 2012. As a result, Betfair said it didn't expect the restructuring to have a positive impact on its earnings this year.
In the year to April 2012, it expects to save 10 million pounds, with the benefits of the switch totalling 20 million pounds each year thereafter.

Betfair said it would continue to be incorporated in the UK and employ about 1,200 people at its headquarters in Hammersmith, London, and other UK locations.

Betfair is not a traditional bookmaker but instead acts as an intermediary between gamblers wanting to place a bet or offer odds to others, taking a commission on their winnings.