Gambling: All About Taxes
Gambling: All About Taxes
The tax authorities lose several million euros in taxes every year through illegal online casino providers. Clear legal rules provide a remedy here. Experts assume that an annual turnover of a good 14 billion euros is achieved through the German gaming market. This estimate also includes the income of the individual lottery companies as well as that of casino and sports betting providers. However, it can be assumed that more than twenty percent of these sales are generated illegally. A trend that is apparently on the up. On the other hand, there is good tax news for the players. Profits made from gambling are still largely tax-free.
Brexit and gambling
So far it looked rather poor in terms of nationwide regulations for online casinos with their numerous virtual offers such as online poker, online slots and live casinos. With the new State Treaty on Gaming, which will come into force in July 2019, everything should finally be different. Online casinos are moving into the long-awaited legality, and the state has every reason to be happy. After all, the officially approved online providers then ensure an enormous increase in tax revenue. Numerous operators were previously dependent on obtaining licenses abroad. In order for their customers to be able to gamble legally, they had to apply for licenses from Malta, Curacao or Great Britain. However, there are also very clear guidelines and, in some cases, strict regulations that have to be met in order to obtain a corresponding license. All of these measures are primarily aimed at protecting players. Player protection is particularly important in the EU member states. In addition to Germany, the EU also includes (in alphabetical order) Belgium, Bulgaria, Denmark, Estonia, Finland, France, Greece, Italy, Ireland, Croatia, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Poland, Portugal, Romania , Sweden, Slovenia, Slovakia, Spain, Czech Republic and Hungary. Britain has chosen to go it alone, also known as Brexit. Since the end of January 31, 2020 at midnight CET, the United Kingdom has ceased to be a member of the EU. This was regulated by a withdrawal agreement that was signed on January 24 of this year. It remains to be seen what this so-called Brexit will mean for the gaming industry in the long term.
Are gambling winnings tax-free?
Numerous players in Germany keep asking themselves whether they have to pay tax on the winnings they have made while gambling and whether there is a difference in winnings from the lottery, casinos, betting offices or online casinos. Basically it can be said that all winnings that are based on chance or luck are tax-free. This is regulated in Germany by Section 4 No. 9b of the UStG and applies to winnings from online casinos that have an EU license, arcades, lotteries and casinos. It doesn’t matter how high the profit is. However, should a person be classified as a professional gamer, it is entirely possible that income tax will also be charged in that case. If the winnings are deposited in an account that pays interest, only the interest must be taxed. RennwLottG is the abbreviation for the German racing betting and lottery law. This includes all types of games of chance that are offered by an operator who has a tax number in Germany or another EU country and pays taxes to the respective state. This means that operators of games of chance, such as online casinos, arcades, casinos, lottery companies and bookmakers have to pay sales tax and in some cases even a so-called gambling tax in order to ensure that their winnings are really tax-free. This varies from EU country to EU country.
Beware of profits from countries that do not belong to the EU!
As mentioned at the beginning, it is important that the profits have been made with an EU provider who has an EU gambling license and pays his taxes in the country in which he received the license in accordance with the regulations. If, for example, winnings have been made in an online casino from the Caribbean that may not have a license at all, it can become very complicated. Even after winning a Las Vegas vacation, you should be careful. If the amount that is imported into Germany is higher than 10,000 euros, this must be reported to the customs authorities. When it comes to an online casino profit whose operator is not licensed in an EU country, the money can even be confiscated in the worst case.
As long as profits of a very high magnitude remain the exception, the tax authorities more or less do not care. However, if high sums appear in an account more frequently or even regularly, the state is listening. Especially if the profits exceed the monthly income or are the only income, then you run the risk of being classified as a professional player and this of course means tax liability. There are a number of online poker players who have suffered from this regime in the past. Therefore it is advisable to be careful. Because income tax on the winnings can also be levied retrospectively if there is a classification as a professional player. And it doesn’t matter which game you play so successfully.