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Spain Clarifies Gambling Tax Regulations

by Ulrika Lomas, Tax-News.com, Brussels

05 April 2013


The Spanish Finance Ministry has recently clarified the rules pertaining to the taxation of online gambling profits and to the taxation of lottery and betting winnings.

The Finance Ministry made clear that online gambling losses do not give rise to tax credits that can be deducted from income tax. Losses may only be used to lower capital gains derived from online gambling activities.

Spain’s Law of 16/2012 allows gambling losses to be discounted from winnings in the same taxable period, effectively reducing the net capital gain to be integrated into the general tax base of the taxpayer. The law was published in the Official State Gazette on December 28, 2012, and brings the Spanish system more closely into line with that of other countries, particularly with regard to online gambling.

The Ministry highlighted the fact that lottery and betting winnings in excess of EUR2,500 (USD3,202) are now subject to a 20% rate of taxation in Spain (from January 1, 2013). A withholding or payment on account coinciding with the amount of this special tax is applied and operates as an exonerating withholding tax.

The Finance Ministry highlights the fact that both systems of taxation serve to contribute effectively to state budget revenues.

TAGS: Finance | tax | law | budget | tax credits | gambling | tax rates | withholding tax | Spain | tax breaks | individual income tax

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