New tax rate on lotteries in Spain from 2018

Tax lottery in Spain

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.

Countries that tax winnings on lottery prizes

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.

    • Portugal taxes winnings from € 5000.
    • Italy has a table with variable tax brackets quite complex. For prizes lower than € 500, they have a fixed amount of up to € 3.10, while for prizes above €1,000 they have a fixed part of € 6.20 plus a variable of 12%.
    • Croatia also varies the percentage of retention between 10 and 30%, which increase as more is perceived.
    • Switzerland, for prizes greater than 1000 CHF, applies a 35% tax.
    • Poland, 10% for prizes with a value equal to or greater than 2,280 zloty (PLN).
    • Slovenia, tax 15% from €300.
    • The Netherlands taxes in prizes exceeding € 499, tax 29%.
  • In the United States, the thing is quite complex, since the beginning all prizes have a 25% tax, as long as the winner is a citizen or resident and has a social security number. In the case of not having such accreditation, they are retained 28%, and if it is foreign, the amount goes up to 30% tax.

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.