Online gambling is evolving with effortless access to smartphones and the internet. The online gambling industry has vastly surpassed the traditional gambling industry by making games and earning extra money more accessible to the general public. For some, online gambling is also a source of revenue and a means of making a living. However, the issue of online gambling taxation has lately arisen.
Generally, whenever you earn money from any source, you must pay a portion of it to the government as income tax. But does this also happen with online gambling winnings? We shall look into this further in the following parts.
Variation in taxation
The taxation of online gambling varies from place to place. Whereas the rules vary by country, you will only be charged if gambling is your career or your primary source of income in many circumstances. You will not be taxed if you win at gambling but have multiple income sources and do not depend on gambling to make a living.
Highest gambling tax rates
As previously stated, the tax rates for online gambling vary by country. In this situation, France, Germany, and Luxembourg have the highest gambling tax rates, with more than 80% of the tax charged. In France, the tax is mainly levied on horse racing, online sportsbooks, and online poker. On the other hand, Germany levies gambling taxes on sports betting and any online gaming activity from which people gain money. Gains from online activities such as sports betting and lotteries are subject to taxation in Luxembourg.
Denmark is the other country with the highest internet gambling taxation, with about 75% of gains from online gambling activities such as lotteries and sports betting being taxable. However, more than half of the tax is payable in nations such as Australia and the United States, where taxation varies by state.
Finally, other nations where tax is required for internet gambling include Austria, Macau, Greece, and the Czech Republic, where the rate ranges from 35% to 40% without any specific gambling activity included in the list.
You may be wondering what about the other countries that aren’t included here. Is there no taxation on gambling winnings if the players? Some countries, however, exempt their players from paying any taxes, particularly when they gamble online.
Whether or not you have to pay taxes on your winnings all depends on the location where you are from. Good news for people in Europe, Canada, the UK and Oceania! If you live in one of these countries, you will almost certainly not have to pay any taxes on your online gambling profits.
Furthermore, it is completely up to the players to register their winnings in nations such as New Zealand. However, if they are not making a living from their online gambling winnings and it is not a source of income for them, the government will be unable to tax them.