Do you have to pay tax for a lottery prize?

Do you have to pay tax for a lottery prize?

Do you have to pay tax for a lottery prize?

Comments Off on Do you have to pay tax for a lottery prize?

Surely this is a luxury issue and a rarity, but many people are wondering if you have to pay tax on your lottery winnings. The answer makes all Lotto players breathe a sigh of relief.

Lotto prizes are tax-exempt in many countries

A lottery prize is an exception in the German tax system because it does not fall into any of the types of income. The winner will receive the full prize money and will not have to worry about any deductions from the tax office – no matter if he has his

Social benefits can be reduced

If a lottery winner draws social, the profit must be reported as a one-off income. In this case, the profit of course remains tax-free.

Exceptions for foreign lotteries

Caution is advised when participating in foreign lotteries. For example, a whopping 36% in taxes will be due to players who play mega millions online or the American Powerball lottery, if somebody plays from Germany, for example . The state in which the lottery is based decides on such lottery and gambling taxes. In the case of multi-country lotteries such as the Euro Jackpot , no tax will be levied on the prize when participating from EU member countries.

What happens after the win?

Due to the mere possession of a high lottery prize, no taxes are due today in several countries, like Germany or Japan.

As a rule, however, you bring the money to the bank and you want to benefit from the interest on the profit. Since 2009, such capital gains have generally been subject to flat-rate withholding tax on all interest income above a certain amount.

Lotto Tip: If you don’t win, wait!

You need a lot of patience for this lottery trick. If no winner is still determined in the lottery after 12 consecutive draws in a winning class, so-called compulsory distribution occurs. This means that the jackpot will be transferred to the next lower winning class with at least one winner.

In the multi-country lottery EuroJackpot, the compulsory distribution scheme was abolished in February 2013. If the maximum jackpot in the amount of 90 million euros is formed in the first winning class, however, the corresponding distribution share will be transferred to the second profit class, so that very high sums in the double-digit million range are also formed here.

The chances of winning in the second prize class are known to be much higher than the chances of the regular jackpot.

Those who want to profit from the best possible odds in the lottery without taxation, therefore, only participate in special events such as compulsory distributions and jackpot limits. However, there may be several years between these events.

 

Danny White

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