Betfair switches part of business to Gibraltar to reduce tax burden

Betfair, founded 10 years ago by one-time professional gambler Andrew Black and former JP Morgan derivatives trader Ed Wray, said it expected to save £20m a year as a result of the switch, which will see its betting exchange operate under a Gibraltar licence from tomorrow.

Betfair currently pays 15 per cent tax on gross profit from betting, but this will drop to 1 per cent following the move.

Chief executive David Yu said Betfair was also looking to avoid the so-called “double taxation” which it currently faces under UK tax regulations. “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,” he said.

The 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.

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 loca- tions.

The group said it had made a good start to the fourth quarter, with revenue up 6.2 per cent at £77m in the three months to the end of January.

Betfair is not a traditional bookmaker but instead acts as an intermediary between gamblers wanting to place a bet or offer odds to others.