Do you have to pay tax on casino winnings?

Taxing casino winnings - This question is on the mind of anyone dreaming of the big time. The answer is surprisingly simple, but there are important exceptions!

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Gambling vs. games of skill: What's the difference and why is it so important?

I know that this point often causes confusion. What is now Happiness and what is Ability? The distinction is extremely important from a legal point of view.

A game of chance is defined by the element of Random. The best-known example is Roulette. You can be as clever as you like, but the ball will land where it wants.

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In contrast, a Game of skill a game in which the outcome depends largely on the Ability and the player's strategy.

And this is the crux of the matter:

Profits from Games of skill are taxable.

Why? Because they can be regarded as income from "other services" or, depending on their intensity, as commercial income. The classic example of this is poker. Even though many say that poker is a game of chance, the Federal Fiscal Court decided in the past that there is no need for more professional is considered a game of skill. This has turned the entire poker scene on its head!

Let's take another example: chess or e-sports. Here you win because you are better than your opponent. It's not a matter of luck. Therefore, prize money from such tournaments is usually taxable. Fortunately, most casino games that we are familiar with, such as slots or Blackjack (as long as you are not a professional card counter), pure games of chance.

Winnings from games of chance are tax-free.
Winnings from games of skill are taxable.
Poker is often classified as a game of skill, which can lead to tax liability.

Gambling: Pure chance is the deciding factor here. Lotto, roulette, slot machines or most sports bets fall into this category. A player cannot significantly influence the outcome. In many countries, winnings from games of chance are tax-free for private individuals, as they are not regarded as income from "work" or "services".

Game of skill: Skill plays a decisive role here. The best known case is poker. Courts in many countries have ruled that a professional poker player minimizes the luck factor through strategic decisions and thus generates an income. Professional e-sports and tournaments also fall into this category. Profits from such Play are taxable almost everywhere.

The gray area between these two is often the crucial point in court proceedings and tax audits. The tax office examines whether gambling is a hobby or a commercial activity.

3 Application examples: This is what it looks like in practice

So that this doesn't get too theoretical, here are a few examples of what it looks like in reality.

Scenario 1: The lottery winner. Armin wins 1 million euros in the lottery. Does he have to pay tax? No, he doesn't have to. The lottery is a classic game of chance and the winnings are tax-free. He can keep the money without having to declare it on his tax return.
Scenario 2: The sports betting enthusiast. Sarah wins €5,000 in a month through clever sports betting. But she only gambles occasionally as a hobby. Does she have to pay tax? Again, the answer is no. As long as Sarah does not bet professionally, her winnings are tax-free. However, it can be assumed that if she earns such sums per month over a longer period of time, she will have to pay tax. win that the tax office would classify it as taxable.
Scenario 3: The poker player. Markus is a passionate poker player and plays online tournaments almost every day. He has won over €200,000 in the last three years. The tax office classifies him as a professional gambler. Does he have to pay tax? Yes. His winnings are considered income and must be taxed. This depends on how professionally he plays.

Checklist: Am I a professional player?

Are you unsure whether you are still a hobbyist or already a professional? Take this little self-test!

Criterion	Yes	No
Do I spend more than 20 hours a week gambling?	☐	☐
Is the income from gambling higher than my regular salary?	☐	☐
I meticulously track my profits and Losses?	☐	☐
If I apply complex Strategies that go beyond pure happiness?	☐	☐
Do I play the game to make a living?	☐	☐

If you have answered "yes" to more than two questions, you should urgently consult a tax advisor.

Online casino vs. casinos: are there tax differences?

One of my most frequent questions is whether it makes a difference whether I am in the Internet or win in a local casino. The answer is: No, absolutely not. German tax legislation makes no difference here. Whether you are sitting at the roulette table in Baden-Baden or gambling from your sofa at Merkur Bets, the Rules remain the same. The principle of "winnings from gambling are tax-free" applies in both cases.

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The only practical difference is perhaps the documentation. In a land-based casino, you will often receive an official certificate of winnings for large winnings. This is great in case the tax office should ask. In an online casino, you usually have a statement of your winnings, which can also serve as proof. It is important that you have proof in both cases.

I once had a friend who lived in Las Vegas and wondered whether he had to pay tax on it in Germany. The same applies here: German tax laws apply to you as a German citizen, regardless of where you win. However, the USA has its own tax system and a winnings tax is often deducted directly there. If this has happened, there is usually no double taxation in Germany. However, this is a complex issue for which you need an expert if in doubt.

There are no tax differences between online and land-based casinos.
Both types of gambling winnings are generally tax-free.
Proof of profits is always useful in case there are any queries.

Taxes on sweepstakes by country

The question "Do you have to pay tax on casino winnings?" has no simple answer. It is a mosaic of national laws, court rulings and exemption limits.

Germany, Austria, France: Here, occasional players are generally tax-free, but beware of being classified as professional gamblers.
Switzerland, Czech Republic, Poland: There are clear allowances up to which profits remain tax-free.
Italy: The state simply deducts taxes directly at source.

If you live in a country where gambling winnings are tax-free, this also applies to winnings from other EU countries. My personal Tip to you: Always play with reputable providers that have a valid license. This not only protects your money, but also protects you from legal problems. If in doubt, a consultation with a tax advisor is always the safest choice, especially if you have high winnings.

Austria: The tax haven for gamblers

Austria is a true paradise for gamblers in Europe as far as taxes are concerned. The regulations are simple and unambiguous: Gambling winnings are generally tax-free in Austria. This regulation is in the Gambling Act (GSpG) and in the Income Tax Act (EStG) anchored.

The main reason for this is that the Austrian state already taxes the gambling industry with a gambling levy and concession fees. These taxes are paid by the providers (casinos, betting shops, lotteries) before the winnings are paid out to the players. It is therefore a so-called "withholding tax", which does not affect the player but the provider.

What does that mean for you specifically?

No differentiation between amateur and professional players: Unlike in Germany or France, it doesn't matter how often you play or how high your winnings are. Even a professional poker player who makes his living from gambling does not have to pay tax on his earnings.
Valid for all legal providers: The tax exemption applies both to winnings from Austrian casinos (such as Casinos Austria) and to winnings from online providers that have a license in an EU country. The EU freedom to provide services ensures that profits from Malta or Gibraltar are treated in the same way as from Austria.
The only fly in the ointment: If you invest your winnings (e.g. in a call money account) and earn interest or capital gains, this income is of course taxable. However, the original gambling winnings remain untaxed.

In summary, the situation in Austria is clearer and more advantageous than in almost any other country in Europe. You can concentrate fully on the game without having to worry about the tax office.

Czech Republic: The generous exemption limit

Since 2020, the Czech Republic has introduced a new regulation that draws a clear and fair line. Here a Exemption limit of CZK 1 million (Czech crowns) for gambling winnings within a calendar year.

The most important Points at a glance:

1 million CZK threshold: Winnings from games of chance that do not exceed this limit in one year are completely tax-free. You don't even have to declare them on your tax return.
Taxation of the excess: Only the amount exceeding CZK 1 million is taxed. The tax rate for this is 15 %.
Example: If you win CZK 1.2 million in a year, the first 1 million is tax-free. The remaining CZK 200,000 must be taxed at 15 %, which corresponds to a tax liability of CZK 30,000.
Provider-independent: This regulation applies to all legal gambling providers, both in the Czech Republic itself and for online casinos with a valid EU license.
Own responsibility: Unlike in some other countries, as a player you are responsible for monitoring your winnings and, if you exceed the exemption limit, for declaring and paying the tax in your annual tax return. It is therefore recommended, Book on its own profits.

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The Czech regulation offers a very good balance. Occasional players are completely tax-free, while frequent players who win large sums of money pay a fair share to the state.

Poland: The flat-rate tax on higher profits

Poland has one of the clearest and most straightforward taxation systems in Europe. Here, gambling winnings above a certain amount are taxed with a Flat-rate tax of 10 % occupied.

Details you should know:

The exemption limit: Profits that 2,280 PLN (Polish złoty) do not exceed tax-free. This applies per individual win, not per calendar year. So if you win small amounts several times a year, you do not have to pay tax.
Taxation: As soon as a single win exceeds the PLN 2,280 limit, the entire amount is taxed at 10 %.
Automatic discharge: The best thing about the Polish regulation is that you as a player hardly have to worry about it. The tax is usually Directly from the gambling provider will be withheld and paid to the Polish tax office. This means that you will receive your winnings as a net amount.
Important: This regulation applies to all games of chance, including lotteries and sports betting, where the stakes were placed with legal Polish providers or EU-licensed providers.

Poland has thus created a very pragmatic and convenient solution for the player. You do not have to calculate or declare taxes yourself, which makes the whole process extremely simple.

Switzerland: The million-dollar tax-free allowance

In 2019, Switzerland has the Gambling Act (BGS) which fundamentally reorganized the taxation of gambling winnings. Since then, winnings from legal games of chance have been tax-free in Switzerland under certain conditions.

Here are the key points:

CHF 1 million allowance: winnings from online casinos licensed in Switzerland and Casinos are tax-free up to an amount of CHF 1 million. Anything above this threshold is taxed as income.
Lotteries and sports betting: For lotteries and sports betting, a separate allowance of 1,000 CHF. Profits that exceed this amount are taxable.
Foreign providers: Winnings from games of chance at foreign providers not licensed in Switzerland are basically taxable. No tax-free amount applies here. This is one of the most important differences to the regulations in the EU. The Swiss In this way, the state wants to strengthen domestic, licensed providers.
Differences to the EU: While the freedom to provide services in the EU puts winnings from other EU countries on an equal footing for tax purposes, this is not the case in Switzerland. As a Swiss citizen who wins from a provider without a Swiss license, you must pay tax on these winnings.

Switzerland has drawn a very clear line to protect players and generate revenue at the same time. The regulation is very advantageous for players who stick to licensed providers, but it can be expensive if you play with unlicensed foreign providers.

Italy: Taxes directly at the source

Italy has a particularly efficient method of collecting taxes on gambling winnings. Casinos and betting providers are required by law to pay the taxes Directly at the source to be paid. This means that if you make a profit, the tax amount is deducted before the money is transferred to your account. You therefore receive a net amount and no longer have to worry about taxes.

Important judgment: A ruling by the European Court of Justice has made it clear that Italy is not allowed to tax winnings of Italian players from other EU countries, as this would be a restriction on the freedom to provide services. So as long as you play with an EU-licensed provider, your winnings are tax-free in Italy.

Germany: The gray area of the professional player

In Germany, the motto is: "Winnings from gambling are tax-free". This is the general and reassuring rule for most players. It applies to all winnings generated under the State Treaty on Gambling of 2021 - i.e. with licensed online providers, in the lottery or in state casinos. Instead, the state levies a gambling tax directly on the providers.

But there is the famous "but". The tax exemption only applies to occasional players. If you are recognized by the tax office as a Professional player the situation changes radically. The criteria for this are not defined in a legal text, but result from case law.

Decisive criteria for professional players:
- Regularity: You play every day or almost every day.
- High stakes: Your stakes are so high that they exceed the limit of a hobby stake.
- Professional approach: You analyze your playing style, keep meticulous records of profits and losses, use special strategies and live primarily or exclusively from your earnings.
Important judgments: There have been important court rulings in the past, particularly for professional poker players. The Federal Fiscal Court has ruled that a poker player who achieves his winnings through targeted strategy and not just luck must be classified as a trader. This led to high back tax payments.

My conclusion for Germany: As long as you play as a hobby and not as your main occupation, you can enjoy your winnings tax-free. For high, regular winnings, you should definitely consult a tax advisor.

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France: Casual players are exempt

In France, gambling winnings for casual players are tax-free. This applies to casino games, lottery and horse betting. As in Germany, there may be exceptions for professional players who finance their livelihood with gambling. In these cases, the winnings are considered income and must be taxed.

FAQ section: The 10 most important questions at a glance

Do I have to report my profits to the tax office?

No, as a private occasional gambler you do not have to actively report your winnings from games of chance to the tax office. The tax exemption means that you do not have to declare these winnings in your income tax return. This applies to all types of gambling, from lotteries to online casinos.

Are profits from abroad taxable?

Winnings from online casinos in other EU countries are generally tax-free as long as the provider has a valid license. EU laws ensure that these winnings are treated no differently to winnings from Germany. The legal situation can be more complicated for providers outside the EU, which is why you should exercise caution here.

What about free bets or free spins?

Winnings from free bets or free games are also tax-free. Legally, they are treated no differently than winnings made with your own money. Insert have been achieved. The bonus amount is merely a marketing tool used by the provider to encourage you to play.

Can I deduct my losses for tax purposes?

No, unfortunately this is not possible. As winnings from gambling are not taxable, losses cannot be claimed for tax purposes either. The only exception is if you are classified as a professional gambler and have to pay tax on your winnings. Then you can also deduct your losses.

What happens if I am classified as a professional player?

If you are considered a professional gambler, your winnings are considered income from a commercial activity and must be taxed. You must then submit a tax return and declare all winnings and losses. This can lead to high additional payments, so be careful!

Are e-sports winnings tax-free?

No, e-sports winnings are generally taxable. As e-sports is considered a game of skill, prize money is classified as income from "other services" or a commercial activity. They must be declared and taxed in the tax return.

Do I have to pay tax on interest on my winnings?

Yes, if you invest your winnings in a call money account or other investments and earn interest or returns, this income must be taxed. Although the original gambling winnings remain tax-free, the resulting capital gains are taxable.

What about poker winnings?

This is the gray area. Poker winnings are generally tax-free in Germany. But if you are a professional player and use poker as your main income, the tax office classifies you as a "professional gambler" and the winnings are taxable. The decision always depends on the intensity and regularity of your playing style.

Does this also apply to sports betting?

Yes, the same rules also apply to sports betting. Winnings from sports betting are tax-free for private players. Only if betting is carried out so professionally and regularly that it resembles a commercial activity do the winnings become taxable.

What happens if I win a non-cash prize at the casino?

Prizes in kind such as cars or trips are also generally tax-free. They are treated like cash prizes. However, if you sell the non-cash prize, the proceeds may be taxable under certain circumstances. In this case, it is best to consult a tax advisor.

Glossary of the most important technical terms

Gambling: A game whose outcome depends largely on chance.
Game of skill: A game whose outcome depends largely on the player's skill.
Professional player: A person who operates gambling so professionally that it is considered a commercial activity.
EU freedom to provide services: The right of companies to offer their services throughout the EU without being discriminated against. This also applies to online gambling.

Conclusion: Fear of the tax office is unfounded in most cases

Phew, what a journey. I hope you feel a bit more confident now and know how to deal with the issue. The main message is quite simple: as a normal, private player who gambles from time to time, you have absolutely nothing to worry about. Your winnings are tax-free, regardless of whether they come from the lottery, sports betting or the online casino.

There is only one situation in which you need to be careful: if you play and win so much that it seems like a profession. But even then, there are clear rules you can follow. My tip? Play for fun, enjoy the excitement and keep your winnings with a clear conscience.

Casino winnings are generally tax-free for private players.
⚠️ Be careful when classifying as a professional player - this can lead to tax liability.
💡 If in doubt, always ask an expert and preferably play with legal, licensed providers.