Tax regulations on lottery prizes
Taxation of lottery winnings in different countries
In several countries, it is common to subtract a certain tax percentage from a lottery prize. Sometimes it is so overvalued that, by hitting a jackpot of several hundred million, the state will receive a lot of money and, as a result, the lucky winner will only receive a half of the sum or even less. But in some countries, this is not applicable and a winner gets the whole amount entirely.
If you use a mediator that buys lottery tickets on your behalf, you will pay taxes depending on the place of ticket purchase. In case you win a lottery in a country where winnings are taxed, you usually have to pay the tax only once. However, it is always important to check and be aware whether you are obliged to pay to your country treasury for the second time. Let’s have a look at what kind of tax regulations are set in countries all over the world.
No tax area
Residents of Great Britain, France, Austria, Belgium,Turkey, Australia, Finland, Belarus, Ireland, Canada, New Zealand, Latvia, South Africa and Hungary receive lottery prizes in full amount because in these countries taxes on lottery winnings are absent.
Lottery tax rates up to 20%
- Players in Poland and Bulgaria pay 10% of taxes to the state upon winnings of any prize.
- The winners from Italy are paying at a rate of 12% (the lottery winnings must exceed 500 euros).
- In Denmark, wins over 200 kroons are taxed at 15%.
- Since 2013, the Greek government has agreed on new tax rates: lottery winnings of up to 100 euros aren't being taxed, from 101 to 500 euros the tax is 15%.
20% and above
- If the prize in the Spanish lottery is higher than 10,000 euros, then the state requires winners to pay a tax of 20%.
- Very similar to Spain is tax legislation in Portugal, but in this case, residents of the country who win more than 5,000 euros pay 20% to the treasury.
- In Colombia, a tax of 20% is applied if the prize is higher than 48 Tax Value Units, which represents 1 591 488 colombian pesos, about 473,74 euros (in 2018 one Value Unit is fixed in COP 33.156).
- In Romania, the lottery tax is 25% for any prize.
- According to the tax code of Ukraine, the state always deducts 30% of the prizes to the winners.
- In the Netherlands, for prizes over 499 euros, the winners have to pay 30,1% to the treasury of the country, since January 2018. However, the tax is not levied when a lottery prize is less than 499 euros.
- In Argentina, if you win a lottery prize higher than 1200 argentine pesos (about 48 euros) you must pay a tax of 31%.
- When it comes to Mexico, an amount of 1% of the winnings must be paid as federal taxes, plus an additional percentage that may vary according to the state: for example in Mexico City additional 6% of the prize must be paid as state taxes, which means players must pay a total of 7%, while in Zacatecas the state tax is 1.65%, which represents a total of 2.65% on taxes.
- Lotteries in the United States have the biggest jackpots in the world. And taxation on winnings is quite complicated. According to US law, lottery winnings are treated as a form of additional income. When receiving a cash prize, the lottery participant pays two types of taxes: federal income tax and state tax, according to the winner’s state of residence. In general, tax rates in the United States fluctuate from 30% up to 40% of the lottery prize amount. Thus, having received a multi-million dollar jackpot in the American lottery, a winner will have to pay off as a tax almost half the amount.
- Lottery winnings in Switzerland are taxable as income. However, only winnings above 1000 Swiss francs must be declared as taxable income. A tax deduction equal to 5% of taxable winning applies, up to a limited amount of 5000 francs.
- In Russia tax regulations regarding lottery winnings also vary from other countries. If you receive winnings in a lottery, you will have to pay tax at a rate of 13%. But this tax rate is set only for those who live most of the year in Russia, even if they are not citizens of the country: it is enough to stay on its territory for at least 184 days a year. Instead, for people who stay in Russia less than 184 days a year and are not recognized as residents, the tax rate is 30%. Moreover, Russian citizens who paid lottery taxes in the host country are obliged by Russian law to pay the tax percentage again to their country treasury.
You never know when luck will favor you, and maybe one day you will be our new EuroMillionaire! We advise you to always keep in mind how to claim your lottery prize in a proper way and be aware of tax regulations in your country.