Learn about Gambling Taxes from around the world. We discuss which countries pay taxes on gambling and how much tax applies to winnings from gambling.
Contrary to the fairy-tale narrative constantly pushed by casinos and gambling providers, gambling winnings are subject to government tax, whether cash or not. Cash winning includes all prizes received in the form of physical money, while non-cash prizes may be a car or a paid vacation. Regardless of the form, a player is, however, expected to pay tax.
This article will discuss the taxation laws regarding gaming in different countries around the world.
Unlike other countries, gambling is legal, completely regulated and tax-free, at least for players. This helps players keep all winnings without having to pay any form of tax. This tax-free rule applies to bettors in Scotland, Wales, Northern Ireland and England.
Whether online or land-based gambling, players are not required to pay betting duties. This change didn’t occur until 2001, when the Chancellor of the Exchequer, Gordon Brown, removed the requirement to pay tax on winnings from betting. The UK government is forced to accept this due to the unexpected surge of betting offshore. Apart from taxless betting, the UK government has made several other enactments to ensure gambling is completely regulated and controlled. The Gambling Act 2005 and the United Kingdom Gambling Commission are some examples of the intense interest of the government in both online and land-based gambling.
Her Majesty’s revenue can sustain itself by placing a 15% tax levy on all providing gambling services. This means betting shops, online and offline casinos, slot machines, poker, arcade centres etc.. All have to pay tax to the government from the profit generated.
Each year, around 40% of all adults in America pay a visit to a minimum of one casino, and if fortunate to win while playing, a player cannot keep all winning. All winning obtained through gambling is taxable and must be submitted to the Internal Revenue Service. All forms of gambling winning are taxable, not just winnings from a casino.
If a large amount of money is won in a licensed and legal gambling house, the gambling operator deducts an estimated 24% of the winning and remits it to the IRS. The player is also expected to fill an IRS Form W-G2, which documents all transactions. Depending on the type of game played and the amount won, the tax might be over 24%.
There is, however, an exception to this general method of paying tax. Gambling operators are not mandated to remove taxes on behalf of the IRS or give out W2-G forms to players who win a substantial amount of money from playing Blackjack, Craps, and roulette. This is because these table games are classified as games of chance.
Australia produces the most gamblers as over 80% of all adults in the country are involved in some form of gambling. With the highest percentage of gambling, it’s no surprise that gamblers lose more than $24 billion in a year, with each adult losing as high as $1200.
However, despite the lucrative nature of gambling in Australia, winnings are not subject to tax, regardless of the amount won. This is because the government does not consider gambling a vocation but rather a pastime and entertainment. Since gambling isn’t regarded as a profession, winnings are not considered an income, hence the taxless nature of gambling winnings. The government, however, places a tax on those offering gambling services or operating a gambling site.
Depending on each state, tax payable by a gambling operator vary since each state adopts various tax rates and bases. Some operators are taxed based on their gross profit, losses of players and turnover.
For gamblers in New Zealand, there are no taxes on gambling winnings. This is because the government regards gambling as a pastime rather than an actual job. This taxless policy covers all forms of gambling, such as lotteries, online betting, sports betting, poker etc., and players get to keep all winning.
There are no special legislations regulating different forms of gambling. The Gambling Act of 2003 dictates how gambling in New Zealand is governed, and according to the Act, there are no taxes on proceeds from gaming. The Income Tax Act also protects players from paying tax on dividends from online gambling.
Gambling taxes in Canada vary, considering taxes are enforced on some form of gambling. Gambling such as lottery or casino games, done online or in the privacy of a player’s home, is immune to taxes. However, if the gambling winning is obtained from an established casino tied to a specific office or physical location, such winning will be subject to tax. Since the income tax code does not regard gambling as a type of exchange, employment or business exercise, winnings obtained from gambling activity conducted in the home have no imposed tax.
However, if a player plays in a recognised casino, either land based or online, all winning is regarded as income, tax is payable, and a W-2G form may be required. When filling a tax return, all wins and losses are to be clearly indicated in the gambling category.
In Germany, taxes are levied on both land and online betting operators. A 5.3% tax is payable by gambling operators on all wagers placed by players. The tax base and tax rate are homogenous across the country, and each state adopts the same tax base, resulting in the same tax rate levied on all bookmakers.
Swedish Players does not have to pay taxes on gambling winnings. However, all gambling operators with a license from the Swedish Gambling Authority are compelled to pay a tax of 18% on all profits. In addition, casinos have to pay tax on the variance between the wagers placed by players and the amount paid out as winning in a month, which is considered the tax calendar. Players may also have to pay tax if the winning is obtained from a casino or slot machine operated in Sweden.
Finland is recognised for its generally liberal attitude towards gambling, which is also evident in the country’s taxation laws. In Finland, players do not have to pay a part of their gambling winnings as tax. Regardless of the amount paid as a jackpot, a player is entitled to all the money. The introduction of cryptocurrency is also becoming quite popular.
Gaming winnings that are above 10,000 Kroner are regarded as a random prize and are subject to a tax of 27% under the Norwegian Taxation Act.
Professional gambling is considered a form of self-employment; hence all winning is considered an income. All losses will be deducted, and winnings incur tax. Whether a player gambles offshore or in Norway does not impact the amount of tax paid.
Gambling activities carried out for a social benefit and in a European Economic Area do not attract taxation.
Higher taxes are imposed on land-based gambling operators than online operators. For land-based gambling, pay a 40 to 80% tax rate on a tax base of 10 million Swiss francs; for every increase in the tax base, an additional 0.5% tax rate is paid. For online gambling operators, a tax rate of 20-80% is laid, which is liable to decrease in the first four years of startup.
There is no need to pay taxes for players who engage in local gambling with Swedish operators. However, gambling winnings above 1 million Swiss francs, whether obtained from land-based or online operators, are subject to tax. Gambling with an unlicensed gambling operator attracts tax, regardless of the amount won.
Players in Belgium do pay gambling taxes, but the casino, whether land-based or online, pays the 11% tax to the taxation authorities on their behalf. What’s more, is that players are only taxed on their total profit made. So if you have won €1000 but played €500, you are only taxed 11% on the 50% profit you made. Belgium lottery wins are tax exempt, although all winning must still be declared on their tax return.
A gambling tax of 29% is payable from all winnings through games of chance. However, paying these taxes depends on where the operator is licensed. If licenced in the Netherlands, no tax is charged on amounts lower than €454. If the licence is international, players will pay taxes on the amount. It’s important to note that all winnings, either within the EU, Netherlands or internationally, must be declared on a gaming tax return.
In Denmark, winnings can be taxed or untaxed depending on where players have had their windfall. If the winning is from an operator licenced by the Danish Gambling Authority, the winning is not personally taxed because the operator is. If, however, the winnings are from an operator not licensed by the Danish Gambling Authority, then players have to declare the winning as personal income and are subject to up to 62% tax.
While everyone might not agree with paying taxes, especially on your winnings from gambling, some pros and cons are worthwhile considering.
This depends on the state and country, as there are no homogenous laws regarding gambling taxation on windfalls from gambling.
It’s best to seek professional help when filing a tax return. This ensures nothing is left out.
Most countries do require you to file all records of losses but, in most cases, do not require paying tax on losses.
To find out the percentage payable as a tax on a gambling win, it’s best to seek advice from a professional accountant. This way, you will be provided with the correct figure. You can also research the correct percentage to be laid as tax in your country.
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