Germany's Poker Professionals May Face Tax Bills

KN

24 August 2012

In a test case, a tax court in Cologne is to decide on whether or not professional poker players are actually carrying out a commercial activity rather than participating in games of chance and should therefore be subject to taxation.

In general, profits from gambling games are tax free in Germany. However, the court in Cologne is to examine an appeal submitted by a former poker player contesting the tax authorities’ demands for tax to be paid on winnings totalling over USD1m between 2001 and 2008.

The court is to decide whether or not success in poker relies on luck or on skill. The tax authorities argue that the professional poker player concerned carried out a commercial activity, using skill and a deeper understanding of the game, and did not rely on chance.

In contrast, the plaintiff insists that his success relies mainly on luck, highlighting the fact that although a player can indeed influence a game, this does not guarantee a win.

The outcome of the appeal will be watched closely, particularly as hundreds of poker players in Germany have received similar demands from the tax authorities over the past few years.

A verdict is expected this year.

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