If you play in a casino in Canada and win, do you have to pay tax on the winnings? Many players in Canada ask this question at the lareview when a profit has actually been made in the lottery, in a gambling hall or in an online casino. Do you have to pay online casino taxes for this? In order to shed light on the darkness, we consulted experts. Find out here whether your gambling winnings are taxable.
To answer this question, we have first put together a few important facts:
- Basically everyone is in Canada and the European Union profits made from gambling are tax-free for you
- This includes winnings in arcades, casinos, lotteries and online casinos with a valid license from the EU
- How high the profits are is basically irrelevant
- If you are a professional player, you may pay income tax
- Interest resulting from profits is taxable
Your winnings resulting from gambling are therefore always tax-free?
In order for the casino winnings not to become part of the tax return, a number of conditions should be met. This is the only way you can be sure that you will not have to pay any gambling tax in 2021 either.
Let us first consider the German sales tax law: This states that sales from racing bets and lotteries are tax-free. For this it is important that the organizers of these bets or lotteries pay taxes in an EU country. So if you play with a company that is not taxable in the EU, you may incur taxes on your gambling winnings.
Profit must come from the EU
If the profit was made within the European Union, no tax is due. For example, if you play in an online casino with an EU license, you can easily collect your winnings tax-free. If, on the other hand, you opt for a casino with a gambling license from the Caribbean or if you land a profit of 10,000 euros on a trip to Las Vegas, the winnings must be declared. Taxes are still not due.
It should also be noted that a profit from the online game can also be confiscated if you play outside the EU, because for you as a German player it is only legal to play with a provider with an EU license. European Online casinos for Canada you can find almost exclusively with us:
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Other regulations for professional players
If you are a professional poker player and regularly win large sums of money playing it, the state may well qualify you as a professional player. This is especially true if the income can be counted as income or regularly exceeds regular income. You can then be subject to income tax retrospectively should the court decide that you are clearly to be regarded as a professional player. It doesn't matter which casino game it is. Regular and high profits could make the tax office prick up their ears.
How do you decide whether you are a professional player??
German tax offices are very careful to classify income. If you have no other income besides your poker earnings, this is a great indicator for the tax office and the courts. Often it was justified by the fact that with this one won Casino real money the livelihood was made - if this is exclusively the case, one can assume to be regarded as a professional player. Ultimately, however, this is and will remain a gray area.
It usually doesn't affect very many people - and sometimes those people turn their backs on Canada. They live in Great Britain, Gibraltar or Malta, for example. But not because you pay less tax on income from poker winnings than in Canada. Income from gambling winnings is usually not listed there.
So what tax theoretically applies to professional poker players??
In Canada, the following types of taxes could theoretically apply to winnings from games of chance:
- Income tax
- value added tax
- Business tax
As a rule, however, the theoretical approaches remain here. The tax regulations are of course borrowed from other business areas and are explicitly not tailored to, for example, poker. In practice, these are too complicated and de facto not feasible, also due to the alternatives mentioned above.
Tax free gambling
It doesn't matter how much the profit is. The winnings that result from gambling are in principle always tax-free in the Federal Republic of Canada. We have named exceptions above. As long as you are not a professional player and gamble within the EU, you are on the safe side.
The important thing is that the game you choose must clearly be random. Skill and skill should hardly play a role here. roulette and Baccarat are games of chance, a chess tournament does not count of course. Same goes for games like bingo, Slot machines, Sports betting and horse racing, Blackjack, lotto and so on - they are all tax free.
How does the profit distribution work?
Once you've won a game, what happens next depends on the type of game. For example, if you won with a lottery ticket, contact either the website or the local bookmaker from whom the ticket was purchased. If you landed the big win on a slot machine, the win will appear in your player account.
You can then have it paid out, for example via the classic bank transfer. In some online casinos there are weekly or monthly limits to be observed, so that maybe not everything can be paid out at once. However, the profit does not expire and you always get exactly the money that you are entitled to.
If you have received your winnings, you can be happy. Of course, there are no taxes on your profits. Accordingly, you don't even have to mention the profit in your tax return. We recommend, however, that you obtain confirmation of the payment of your winnings from the online casino. In case of doubt, you can prove where the profits come from, should the tax office ask.
I report my profit to the tax office?
No, you do not have to declare your winnings from the gambling to your tax office. So it doesn't have to be included in your tax return. Make sure you have proof of where the money came from. After all, the tax office may well want to find out where the sudden money comes from.
How do I prove my online casino profit?
In every reputable online casino you should also receive some kind of receipt after your winnings have been paid out, for example by e-mail. It is essential to keep this, as it may be necessary for you to present it to a tax or customs officer.
Online casino taxes only for interest
Your profit itself does not have to be taxed. However, you may still have to pay taxes afterwards. These are taxes on the interest resulting from your profits. Let's assume that you hit the jackpot at Mega Moolah, then you would be quickly with an amount in the six-figure range. If you then invest your money, your profit is still tax-free in the first year, but taxes are incurred afterwards. The final withholding tax is 25%.
Find an online casino with no taxes
Playing in online casinos is becoming increasingly popular. This is not surprising, after all, playing at home or on the go is very convenient. So you can land a big win from anywhere. It is only important that you know exactly how it behaves on the respective page with the payout of winnings.
Always choose a reputable provider that offers a EU license for the online casino can show. Not only are you on the safe side as a player, but you also know that your winnings are tax-free. Which casino ultimately has the best offer for you depends entirely on your preferences.
Basically, there is nothing that does not exist. It doesn't matter whether you want to try your luck with sports betting, roulette or a slot. The offer is great. As long as you move within the EU and choose a solid provider, the gambling winnings remain tax-free and you can hopefully enjoy one or the other winnings that land in your bank account.
Conclusion: Gambling will remain tax-free in 2021
The gambling lovers from Canada can breathe a sigh of relief. Winnings from gambling are still exempt from tax under the Value Added Tax Act. The legal situation will not change in 2021 and therefore it will remain tax-free for the next year. It doesn't matter if you are play at a machine, watch the roulette wheel or place a sports bet. The winnings are paid out at 100%, unless the bookmaker himself charges a fee.
Just make sure that you limit yourself to the EU and are not a professional player, then there are no deductions. Should you ever find yourself in the situation of having to declare a win, you should have the receipt for your payout at hand. Otherwise, the profits do not even have to be declared on the tax return and you can do whatever you want with the nice money. Tax is only due on the interest on your winnings, otherwise the payout is entirely yours.
Frequently asked questions about gambling taxes
► Are winnings from games of chance tax-free?
Yes, in fact, all casino winnings are tax-free as long as they are due to chance or luck. Taxes only have to be paid to the state on any interest that may arise. The actual profits are exempt from tax.
An exception are games of skill, which may also include poker, for example. Here in Canada you are often still in the gray area in terms of tax law.
► Do you have to pay tax on lottery winnings??
No, even if you hit the lottery jackpot, the winnings are tax-exempt for you. Again, however, this does not apply to the interest or income that any investments or investments would accumulate. Taxes must always be paid on interest. Taxes must also be paid on business income from fixed investments.
► Are sports betting tax-free in Canada?
Theoretically yes. Sports betting is also tax-free according to the Racing Betting and Lottery Act. However, it is de facto that the tax authorities still levy 5% sales tax on every bet made by the bookmakers. It now depends on the bookmakers and how they deal with it. Some providers pass this tax on directly to the customer, while others do not.
06/01/2021