The prospect of a 12% tax on winnings under EUR 500 in Italy was reported by the country’s media in October, having had a preview of the government’s plans for the 2020 Budget. It was also reported that this winnings tax would increase in line with the winnings, up to a rate of 23% for the larger lottery jackpots. But these proposals in Italy are by no means exceptional. Across the world governments are seeking to take money off winning punters.
In Latvia, for example, a winnings tax has been in place for two years. The threshold was increased in 2019 and now winnings of between €7,200 and €55,000 are taxed at the rate of 23%, whilst winnings above €55,000 are taxed at the rate of 31.4%.
Moldovan gamblers are taxed even more strictly, with any gambling income over MDL 240 (EUR 12) eligible for tax at 18% from September 2019.
In Poland a winnings tax was introduced on 1 January 2018 at the rate of 10% on winnings over PLN 2,280 (approx. EUR 530). But the tax is not applied on casino and slot machine winnings.
The Spanish region of Valencia has a tax on casino winnings. From 1 January 2019 casino winning are taxed in the following way: 20% on winnings up to €2m, 30% on winnings between €2m and €4m, 40% on winnings between €4m and €6m and 50% on winnings of €6m and more.
Looking outside Europe, Tanzania’s Finance Act 2018 introduced a winnings tax at the amount of 20%. Casino winnings have a lower rate of 12%.
In the Bahamas from July 2019 a winnings tax has been applied to lottery-type games. The rate is 5% for winnings up to BSD 1,000 (approx. EUR 900) and 7.5% for winnings over BSD 1,000.
Governments might congratulate themselves on earning more tax in the short term but taxes on the customers’ winnings do alter behaviour and in the longer term could result in lower gambling revenues. It can influence how operators incentivise customers and encourage unregulated operators, who are not obligated to apply the tax.
These examples are taken from GBGC’s Global Gambling Report, in which you can read about regulatory developments in more than 250 gambling jurisdictions.