PokerStars may be in hot water with Italian financial authorities, as the police unit that investigates financial crimes in that country, known as the Guardia di Finanza, as named an Italian subsidiary of the online poker giant as a major tax evader.
The accusation comes as part of an operation that was code named “All-IN.”
The primary target of the operation is Halfords Media Italy S.r.l., a wholly-owned subsidiary of the Rational Group and one of the firms that PokerStars uses to market their brand in the Italian market.
Italian authorities accuse Halfords of “actions of complex criminal design,” orchestrated by the company’s director, who is being sued for tax evasion as a result.
More specifically, police say that Halfords illegally moved revenues from Italy to jurisdictions such as the Isle of Man and Malta, where they could take advantage of lower tax rates.
PokerStars is strongly denying that there was any wrongdoing on their part. Eric Hollreiser, Head of Corporate Communications for PokerStars and Amaya, made a post on the PokerStars corporate blog to outline the company’s position.
“PokerStars has been working with Italian tax authorities since they launched an audit several years ago,” Hollreiser wrote. “We have operated in compliance with the applicable local tax regulations and have paid â‚¬120 million [$126 million] in local taxes over the period covered by the audit. Like many other global e-commerce companies, we vigorously dispute the stance of the tax authority regarding local establishment. The audit is ongoing and we hope to resolve the issue in our favour soon.”
However, Italian tax authorities seem to believe they have found serious problems during the course of their audit. They say that Halfords was purposely misreporting revenues in order to avoid paying the higher Italian taxes on that money.
That included not only treating revenues from Italy as taxable in other jurisdictions, but transferring costs from those other jurisdictions to their Italian operations in order to further reduce their tax burden.
“The discovery of a significant tax evasion…part of a bigger operations dubbed ‘ALL-IN’…allowed the authorities to understand the real market value of the transactions that occurred between different companies [as] part of an international group, and this will allow them to get back the income that was not declared to the country’s tax office,” the Italian financial police reported. Ultimately, officials believe that Halfords may have omitted around â‚¬300 million ($316 million) in taxable profits between 2009 and 2014.
Italy has been taking big steps towards collecting what they believe are the correct taxes from major companies in recent months, and not just in the realm of online gambling. Major firms like Amazon, Apple and Google have also received requests to provide information on their financial structures in Italy to ensure that they are in compliance with the nation’s tax laws.
While the news of a potentially massive tax dispute may be disconcerting to some who play on PokerStars, particularly in Italy, Hollreiser says that there will be no interruptions or changes in the company’s operations.
“In the meantime, our operations continue as usual on www.pokerstars.it and we remain focused on delivering the most popular online poker service in the Italian market,” he wrote.