How online gambling winnings are taxed: what you need to know

With the opening of the period of delivery of the draft of the Income Tax return, it is time to comply with the obligations with the tax authorities and to update the Spanish AEAT on our income.

In the event that part of the money received during the previous year comes from online gambling, there are a series of aspects that must be taken into account in order to properly complete the return and check that the calculations handled by the Tax Authorities are correct.

Next, we are going to develop the Spanish tax legislation in relation to gambling, what happens when online gambling causes losses and whether it is convenient or not to have the help of a tax advisor.

And remember that you can consult here other questions related to the tax declaration of sports betting:

Sports betting and the Treasury: do they have to be declared?

Fiscal and tax legislation for sports betting in Spain

One of the most important bases of the tax law that concerns all those who obtain an economic benefit from online gambling is the fact that the tax legislation of the bettor, not of the betting house, is used, something that was regulated in Spanish Law 13/2011 on Gambling Regulation. The taxation of sports betting is largely based on this point and it is the basis on which all taxation of sports betting and other games is based.

What impact does this have? It does not matter in which country the bookmaker's tax domicile is located: the Spanish AEAT will apply the user's tax legislation, prioritizing the application of national laws.

Nowadays, the companies providing these services are obliged to communicate to the Tax Agency all the money movements of the users who participate and who obtain a clear monetary return for betting. But, is it necessary to declare the winnings of the bets whatever the amounts that are handled? Are there exceptions?

To find out from how much money bets have to be declared, it is enough to take a look at the latest update of the Gambling Regulation Law: it establishes the obligation to declare them when the profits exceed the figure of 1.000 euros. In the event that the gambling house partially withholds the winnings, which is not very common, the limit is set at 1.600 euros.

How are winnings from online gambling taxed? Let's look at an example. If a person who has been enjoying sports betting throughout the previous year declares winnings of 3.600 euros and losses of 1.500 euros, he/she will only have to declare 2.100 euros, the net profit obtained. Does this mean that online betting losses must be declared? Yes, and it is advisable to do so in order to adjust the net income generated by sports betting to reality.

This process, nowadays, is practically automatic. Taking into account that the bookmakers make a transfer of data to the Spanish AEAT constantly, it is difficult for the Treasury not to be aware of the movements of a user who has been enjoying sports betting, but errors happen and it is advisable to check that there has been none in the calculations.

You may also be interested in:

From how much money onwards must sports betting be declared?

Declaring losses in online betting: can it be done?

Yes, and it must be done, as we have just seen. The bets that must be declared to the tax authorities must include both positive and negative values, because what is declared is the net profit, which is the result obtained by subtracting the losses from the gross winnings.

A frequent doubt that arises among users is whether sports bets are declared if the gross winnings exceed the threshold set by the Treasury, but the net winnings do not reach the minimum.

For example: if during the previous year we have obtained total winnings of 3.500 euros, but we have accumulated losses amounting to 2.600 euros, we will not be obliged to declare sports bets to the Treasury in Spain, because the total amount of net winnings barely adds up to 900 euros.

But in order for the Treasury to oblige you to include sports betting in the IRPF declaration, another requirement must be met: that the income from work be:

  • Over 22.000 euros per year, if there is only one payer.

  • More than 14.000 euros per year, if there are several payers.

Tax advisor for sports betting: is it advisable to hire one?

Assuming that you have to declare the money obtained from betting throughout the previous year, the next question is logical: can I get help to declare the money obtained from betting?

Whether or not you are a regular gambler, a tax advisor can be of great help in declaring your sports bets and, incidentally, can apply his knowledge of Spanish tax legislation to offer you a more beneficial declaration.

Keep in mind that there is no such thing as a tax advisor for sports betting exclusively, but that these specialists offer general help to carry out the tax return in general, whether or not you have obtained winnings from gambling. Therefore, yes, it may be advisable to count on their services to make sure that the filing of the tax return is as beneficial as possible for you and that it is filed without errors.

However, its hiring is not mandatory, and it is perfectly plausible that it is the user himself who makes the relevant checks together with an advisor appointed by the Spanish AEAT to file the income tax return.

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