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Tax free earnings – where to play
What tax rules really applies to winnings on casino, poker or sport betting? Is it such a thing as tax free earnings? We are here to clear things out.
Basics about tax on gambling winnings is that it is more or less tax-free if you play in your own country at a casino that has a license or at a casino that has its license based in the EU. It has not always been the case which we will tell you more about a little later and how this legislation came about.
It is also worth mentioning that the rules vary from country to country, and we will give an account of what applies to each country in as clear a way as possible.
A few words before we begin
Before we begin, we want to make it clear that this guide should not be interpreted or perceived as tax advice. This information should not in any way serve as basis for you in the decisions you make. The guide / article should only be seen as an information about the rules and information on taxes on profits from different countries.
Regulated gambling markets and their tax rules
If you are from a country with a regulated gambling market, there are laws and authorities that decides which casinos that are allowed to operate in that country. We recommend that you play at authorized casinos at any time. It is a matter of security for you as a player. Since the casino has gone through a certification process to conduct its operations in the country.
If you are from a country that does not have a regulated gambling activity but still in an EU country. You can choose from casinos that have a gaming license within the EU or outside the EU. Gambling at casinos within the EU is tax-free if you are an EU citizen. If you are gambling outside the EU, you will need to be taxed.
You are required to state your profits in your self tax assessment. If you are subjected to a review and do not have the stated one, it is likely that tax supplements will make the withheld amount to tax significantly higher. The limitation period is 5 years back so the tax agency may check your tax returns 5 years back in time and also tax it.
Before 2005, profits from other EU-based casinos were taxed
In the past, profits in the EU needed to be taxed because they had local legislation and interpreted all profits outside their own country as ‘earned income’. Companies that offered gambling services and were not in the country had a worse competitive position. There was also a great injustice on the market when, for example, companies such as Svenska Spel had a monopoly on the Swedish gaming market where no others came in.
Lindman judgment changed tax
A great turnaround became the famous Lindman verdict. In short, it was a lady named Diana Elisabeth Lindman who was a resident of Åland and who bought a lot of Swedish games when she was visiting Sweden. She also won SEK 1 million on the backlight ticket but the Finnish state taxed her according to the current rules. Lindman did not think that this was fair procedure and appealed. The case ended up in court which ruled in Lindmans advantage. The European Court of Justice therefore considered that backlight winnings within the EC should be tax-free and that countries cannot have their own laws for their own country’s backlight winnings. The judgment of EC law came on 13 november 2013 and for Sweden the new law was introduced on 1 January 2005 and since then winnings on lotteries within Sweden are tax free, and also within the EU.
Many other countries in the EU also had to revise their laws and regulations on this and adapt them to the decisions of the European Court of Justice.
All of these game forms go in Sweden under the backlight Act and then also poker games that you would otherwise think was a more qualified game but it is thus the same legislation.
Tax on casino and backlight games in other countries
The countries of the EU were forced to review their own legislation when the judgment of EC law came in 2003 and have also adapted them.
If you play at a casino based in your own country or a casino interact in the EU, the following applies:
How to know where the casino has its license
Finding out where the casino has its license is a good thing to do. There are several countries that issue gaming licenses and each casino indicates which gaming license they have at the bottom of their page. You should be able to click directly on the playlist and get to the license issuer. There are several countries where it is easier to obtain a licence than to obtain a licence within an EU country. As a player, you can think that if you play at a casino based in the EU, the casino has had to work more and spend more time getting its license approved. The requirements are therefore higher for the casino with an EU based license or a license in its own country.
How to calculate the tax on casinos outside the EU
If we start from Sweden and tax on casino games outside the EU, Skatteverket’s rules say that profits of SEK 100 or more should be taken up to taxation. That’s not the total amount you win without the winnings separately. Theoretically, you can win lots of small winnings of 50 SEK, 75 SEK etc. which together will be 50,000 SEK but which you do not have to pay taxes for. However, if you have a profit that is SEK 100 or more, tax should be paid by 30% in the case of Sweden.
Good things about casinos in the EU
There are some good things about casinos within the EU. On the one hand, they are adapted for the European market but as they operate and exist in your area, there may also be a number of other good things such as customer service in the local language. The internet page can be translated into the local language. You can play with and make deposits with local currency and if you have problems with anything then it can be easier to operate your question when you are at a casino that has a license within the EU.
Casinos outside the EU
For casinos that have their license issued outside the EU, it is easier to get their license issued. it also means that there will be new casinos on the market all the time when the level is lower to establish itself. Here it is a greater risk that everything does not go right to and you have more difficulty in looking after what rules and laws the casino conducts its activities.
How do I declare tax on my profits
If you have played at a casino that has a license outside the EU, you also need to declare your winnings. You do so by taking up your earnings as an income in your regular declaration and after that you will have to pay tax to 30% of the profit.
One thing you don’t think about is that if you’re going to declare your profits you also get to deduct your losses. This means that if you, for example, play for 5000 kr but win be kr then the win is 5000 kr. this one should keep track of and worth knowing is also that it does not apply if you play between several different casinos. Here you have to play at the same casino in order to use the deductions against the profit you make.
What distinguishes Poker and casino winnings
There are no differences in Sweden, both of these game types go under backlight at the Tax Office. Important to know and to keep track of is that an operator can have casino operations based in an EU country but the poker part itself can be located in another country outside the EU, this one should check out so that you know what is applicable and it is always shown in the footer of the casino what licenses you have.
New Swedish legislation and regulated countries
The new legislation in Sweden means that casinos enter a regulated market and these have decided to operate in Sweden. Here you can be sure that they are well established and have met the law and requirements that apply. Even that it is serious players then it costs a lot to keep a license. The same is true in other interact countries where the arrangement is the same.
In regulated countries, the authorities charge a tax calculated on a percentage tax on the turnover of the casino and it varies between countries.
What happens to casinos that have their license in the EU based country where the country decided to an exit from the European Community
In the case of England which will make a Brexit as decided in the referendum in June 2016, the conditions will change as gambling companies that have their license in a country that is currently within the EU will thus be outside which means that profits from these will be taxed as profits outside the EU. Exactly how the transition will take place, we will be told later when these parts will be discussed and dealt with but it is likely that the outcome will be in this way.