No one dreams of winning an enormous amount minus 39.6% or minus 20%. But unfortunately, this is a calculation that will have to be considered when the lotto is won. USA is the country with the highest tax rate of 39.6% on lotto prize money, followed by Italy and Spain with 20% tax deductions. In countries like France and Japan there are no tax deduction on any lottery winnings. Below is a list of the countries showing the amounts that will have to be paid to the tax man.
Countries with tax on lottery winnings
Prize money up to €500 (approx. R9600) is tax-free. If the winning amount exceeds the value of €500 there will be a 20% tax deduction from the amount. If the prize money is €1 million (approx. R19,3 million) the amount of €500 will be tax free and the rest of the amount, €999,500, will be taxed with 20%. The amount of €199,900 will be deducted from the winning amount, which will give a total of €800,100 (approx. R15,4 million).
USA is one of the countries who charges the highest tax rate on lotto prizes, 39.6%. The USA tax office treat winning the lotto as an income, so they tax the same percentage as income tax. Should the prize money be a million dollars (approx. R17,1 million) the amount of $396,000 (approx. R6,8 million) will be deducted from the winnings.
In Spain, the first €2500 of the prize money is tax-free, any amount exceeding €2500 will be taxed at 20%. Should the winnings be €1 million (approx. R19,3 million), the €2500 will first be deducted and the amount of €997,500 will be taxed with 20%. The total amount of €800,500 (approx. 15,5 million) will be deposited into the winner’s account, after deductions.
Countries with no tax on lottery winnings
If a bet was placed and some of the French Lotto winning numbers are matched, the amount relevant to the matching number prize tier will be paid into the winner’s account without any tax deductions.
If the German Lotto is won, the winner will not be taxed for the amount that they’ve won. The amount advertised is the amount that will be deposited into the winner’s account.
Japan lotto players are on a winning streak all the way, there is no lottery tax in Japan and lotto winnings does not have to be declared citizen’s tax returns. If the amount of ¥1 million (approx. R161,000) is won, the full amount will be paid to its rightful owner.
There is no tax on lotto winnings in South Africa. If lotto players play every now and again just for fun, they will however have to declare the amount won to SARS (South African Revenue Service) as non-taxable income. But things change a bit if a full-time player rely on their winnings as an income. As soon as a lotto player start winning the lotto more regularly and it becomes a source of income, they have to declare their losses and winnings and start paying income tax. Keeping tax regulations in mind, few countries leave winners in a lottery winning paradise. But on the other hand, if winning an enormous lottery pay-out means that a percentage has to be given up to the tax man, but the winner still ends up with numerous zeros on the bank balance sheet, it might be a small price to pay to be considered a millionaire.
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