With the publication in the B.O.E. of the General Budget Law, as of July 5th of 2018, the withholding amounts for the payment of taxes on lottery prizes in Spain changes.
Previously to this disposition that was approved on May 16th in the Congress of Deputies, all lottery prizes in general (Lotteries and State Bets, Autonomous Communities, ONCE awards, Red Cross, etc.) the winner had to pay a retention 20% of the amount of the prize, except for the first €2,500 that were exempt from payment.
With the new law, the amount exempted from tax becomes the first €10,000 (and naturally all awards that do not reach that amount), from July 2018.
But that same provision establishes that for the prizes that will be collected during the year 2019, the exempt amount will be € 20,000, and by 2020 the exemption will reach prizes of up to €40,000.
This will not always apply in all cases, since these exempt minimums will be applied only when the tenth, fraction or lottery ticket is at least of an amount equal to or greater than 0.50 euros. When the prize could be lower, the exempt maximum amount will be reduced proportionally.
Lottery Taxes in other Countries
There are some countries that do not apply initial withholding tax on lottery prizes, but that does not mean that they do not pay them later, since the winning players may be subject to declaring the prize as an extra profit or benefit in the declaration of annual tax.
Countries that have exempt the payment of direct tax in lotteries
Some of these countries are: Germany, Australia, Austria, Canada, Denmark, Slovakia, Estonia, Finland, France, Great Britain, Ireland, Iceland, Latvia, Lithuania, Norway, New Zealand, Czech Republic, South Africa and Sweden, among others.
Prior to 2013, Spain was not among that group of countries that tax the winnings, but as of that date, it became one of the worst countries in terms of taxes in lotteries
Countries that tax winnings on lottery prizes
Chile – There is a single 17% tax bracket.
Colombia – There are two tax brackets. Tax bracket 1: no tax is payable up to Cop70,000. Tax Bracket 2: Any part of the prize exceeding Cop70,000 is subject to a 20% tax.
Spain – There are currently two tax brackets. Tax Bracket 1: No tax is payable up to €40,000. Tax Bracket 2: Any part of the prize exceeding €40,000 is subject to a 20% tax. Citizens of most countries except Spain are entitled to a full tax refund to avoid double taxation. Claiming this refund is the sole responsibility of the player and must be made through the Spanish tax authorities. Tax refunds, upon approval, will be issued during the following calendar year.
Italy – There are seven tax brackets. Tax bracket 1: no tax is payable up to €100. Bracket 2: The portion of the prize between €100.01 and €300 is subject to a flat tax of €1.03. Tranche 3: The portion of the prize between €300.01 and €500 is subject to a flat tax of €3.10. Tranche 4: The portion of the prize between €500.01 and €1,000 is subject to a flat tax of €3.10 and a tax of 20%. Tranche 5: any part of the prize between €1,000.01 and €5,200.00 is subject to a local retail rate of €6.20 and a tax rate of 20%. Tranche 6: any portion of the prize between €5,200.01 and €52,000.00 is subject to a local retail rate of €5.16 and a 20% tax rate. Tranche 7: any portion of the prize in excess of €52,000.01 is subject to a 20% tax rate.
The 20% tax rate only applies to the portion of the prize exceeding €500.
Prizes won in the Italian lottery are subject to an 8% tax rate. MillionDAY prizes are quoted and paid as net amounts, after deduction of the 8% tax.
Philippines – There are two tax brackets. Tax bracket 1: Tax-free up to ₱10,000. Tax bracket 2: Any part of the prize exceeding ₱10,000 is subject to a 20% tax rate.
Kazakhstan – There is one tax bracket. Any portion of the prize in excess of KZT 17,502 is subject to a tax rate of 10% for Kazakhstan residents and 20% for non-residents.
Mexico – There is a 7% tax bracket.
Peru – There are two tax brackets. Tax bracket 1: Tax free up to S/19. Tax bracket 2: Any prize above S/19 is subject to a 10% tax rate.
Poland – There are two tax brackets. Tax Bracket 1: Tax free up to PLN2,280. Tax Bracket 2: Any part of the prize exceeding PLN2,280 is subject to a 10% tax rate.
Portugal – There are two tax brackets. Tax bracket 1: tax free up to €5,000. Tax bracket 2: any part of the prize exceeding €5,000 is subject to a 20% tax.
Romania – There are three tax brackets. Tax bracket 1: cd prizes up to RON 66,750 are subject to a 1% tax rate. Tax bracket 2: prizes between RON 66,750 and RON 445,000 are subject to a flat rate of RON 667.50, plus a 16% tax on amounts over 66,750. Tax bracket 3: Any portion of the prize in excess of RON 445,000 is subject to a flat rate of RON 61,187.50 and a flat rate of 25% on RON 445,000.
Ukraine – There is a single tax bracket of 19.5%.
In any case it is important to consult the tax rules of each player’s country of residence, in case he/she might be subject to other taxes (Double Taxation).
Translated with www.DeepL.com/Translator (free version)
