Do I have to pay taxes on my winnings at non GamStop casinos? This question is on the minds of many jackpot-chasing players as well as poker and blackjack professionals! In fact there is a lot of confusion about this – if my winnings are taxable, then I have to subtract my net losses as well. Rational! How would the government figure out my non Gamstop casino winnings? Is there a way to find out exactly how much tax will be charged on my winnings? In this post we will answer all these questions and more.
It could be irritating to whoever comes across the term “profit tax” during his research on the net. Profits are tax-free, aren’t they? Yes, GAMBLING winnings!
Profits in the tax sense, however, are any income. Therefore, the term “profit tax” is generally used as a generic term for income, corporation and trade taxes. For all taxes on economic income, which can be understood as the profit of a business enterprise.
The “profit tax” has nothing to do with winnings from gambling.
When Do I Have to Pay Taxes on My Non GamStop Casino Winnings?
Contrary to what is often claimed, there is no general exemption from tax for gambling winnings. Since gambling winnings in some respects simply fall through the tax grid, there are enough cases in which taxes are due – but usually not for the “normal” players.
Since it is a question of the interpretation of the law by the courts, taxes may (but do not have to) be due if the following conditions are met.
Is it a Skill or a Chance Game?
The game from which the prize is derived is not purely a game of chance. Skills are necessary for the game. According to some financial courts, this applies to poker, for example. It is not only chance that decides the outcome. This can also apply to intraday stock market speculation, which is of a gambling nature but also (actually) requires skill. Sporting events or esports tournaments are also borderline areas. In the case of a “lucky throw” on the basketball hoop, for example, it would be possible for the (financial) judges to look at whether the thrower is a professional athlete or an amateur. Also profits appearing in television shows are made, quiz shows like “Who wants to be a millionaire” or “Beat the Star ” and the like are usually taxed. The judges argue that certain skills are a prerequisite for winning, i.e. knowledge or physical characteristics.
Professional or Amateur Player
Professionals are the seasoned members of non GamStop casinos who gamble for a living and make a living from regular larger or smaller winnings is subject to tax legislation. Sales taxes may even be due – courts sometimes see such players as “Entrepreneurs”. Even those who regularly take part in tournaments – offline or online -, travel to various events and perhaps also work as a moderator in poker tournaments, for example, will have to pay tax on their winnings. An example is the professional poker player Eddy Scharf, who was classified accordingly by the Cologne Finance Court.
If the prize was won in a non-UK or even non-EU lottery or in an online casino that is not licensed in the UK or the EU. Then, taxes may be due. And possibly several times. First of all, the tax law of the respective country applies. So it may be that taxes are due in the country where the lottery or casino is located. This also applies to winnings on site, for example in non GamStop casinos. Under certain circumstances, taxes and fees may also be due when the money is transferred to your account – or if you bring it with you in cash from abroad. At casinos not on GamStop, the money won may even be confiscated, because of the current legal situation in connection with the State Treaty on Gaming.
Somewhat more indirect are the later consequences of a big win. Because even if the – one-time – profit is tax-free, taxes have to be paid later if you have income from investing the money.
What If I Invest My Profit From Non-GamStop Casinos With Interest?
As we have seen, winnings from lotteries, sports betting and other gambling are usually tax-free unless you are a professional gambler. If you smack all the money you win and just spend it for fun, it’s gone, but you don’t have to pay any taxes.
It’s different if you invest the money “more sensibly” and invest it in real estate, for example, or in shares, or simply put it in a savings account. Because then the same rules for income taxes apply as usual. You generate income with interest or rental and leasing income – and that is subject to income tax.
That is, the profit itself remains tax-free, but indirectly you pay taxes if you buy a house from the profit and rent it out. But then on the rent and not on the profit. For interest on savings books and the like, the so-called withholding and withholding taxes apply depending on the sum (allowances and exemption orders apply normally, of course). Anyone who invests in shares must of course also pay taxes on the resulting “capital gains”.
If you have won a large sum and give away a large part of it to people of your choice – you should also seek the help of a tax expert such as a tax consultant. Because then, depending on the sum, gift tax can also be due.