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.
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.
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.
But in the USA the history of withholding taxes does not end there, since they will also have to face local and state taxes depending on the place of their residence.