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Switzerland Raises Gambling Tax Threshold

by Ulrika Lomas, Tax-News.com, Brussels

06 November 2012


The Swiss Federal Department of Finance (FDF) has recently confirmed plans to simplify the taxation of lottery winnings in Switzerland by raising the threshold for application of the tax.

According to the FDF, from January 1, 2013, a withholding tax will only be imposed on lottery gains in excess of CHF1,000 (USD1,060), instead of on winnings above CHF50 as is currently the case.

Given the urgent need to simplify the existing system of taxing lottery gains, and the fact that the referendum deadline expired unused on October 4, the Federal Council decided that the changes to the withholding tax should enter into force as quickly as possible.

The planned rise in the tax threshold is intended to simplify the collection of withholding tax, thereby reducing administrative costs, which are currently having a negative effect on the amount redistributed to the cantons to support social, cultural and sporting activities.

However, as regards direct federal tax, this new tax threshold is to apply one year later, from January 1, 2014, to enable the Swiss cantons, responsible for collecting the tax, sufficient time to adapt the relevant directives, information systems and forms.

Up until now, although all lottery winnings have been subject to direct federal tax, only gains over CHF50 have been subject to withholding tax.

In addition to the planned rise in the tax threshold, 5% of lottery winnings may be deducted from direct federal tax as bets, although the sum is to be capped at CHF5,000.

Given their fiscal autonomy, the Swiss cantons will be free to determine the tax threshold, as well as the actual percentage of winnings that may be deducted from tax as bets, and the ceiling for the tax deduction.

TAGS: Finance | tax | withholding tax | Switzerland

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