Luck travels through Spain this Friday with the Christmas lottery draw. Everyone looks for ‘El Gordo’, the first prize, by following the draw and checking their number. Up to 400,000 euros per tenth to forget about the mortgage, buy a house or indulge in thousands of whims. The first winner, in any case, will be the Tax Agency and the Treasury, which take a bite out of the prize in the form of taxes. How much…?
All prizes organized by the State Lottery and Betting Society of the State (Selae), including the special Christmas draw, are subject to the payment of a special tax in force since 2013. According to current regulations, all winners of a jackpot At 40,000 euros they have to pay taxes to the Treasury, specifically the 20% that remains above that amount.
The threshold of 40,000 euros has been rising over the years, since in 2019, before the last change, it was 20,000 euros and years ago it was 2,500.
Following this premise, in the case of the Christmas jackpot, the first prize, for every tenth awarded with 400,000 euros, the first 40,000 euros will be exempt from taxes. Of the remaining 360,000 euros, 20% must be taxed to the Treasury. Thus, 72,000 euros will go to the Tax Agency and the lucky winner receives a clean 328,000 euros.
In the second prize, worth 125,000 euros per tenth, taxes will be paid on 85,000 euros (once the 40,000 that are exempt have been subtracted). The Treasury will keep 17,000 euros of the total and the winner will receive 108,000 euros clean.
In the case of the winners of the 50,000 euros to the tenth of the third prize, the formula is the same. If 40,000 euros are exempt, the Treasury is paid 20% of 10,000, that is, 2,000 euros. The lucky person therefore wins 48,000 euros.
The rest of the prizes – such as 20,000 euros for the fourth prize or 6,000 for the fifth prize – are exempt from taxes as they do not exceed the maximum exempt amount of 40,000 euros.
This tax is applied in the form of withholding on account, that is, Selae itself will deduct from the prize – be it a tenth, fraction or lottery coupon – the corresponding tax at the time of payment, so that the winners will not have to pay no additional procedure. The Christmas lottery prizes have no impact on the personal income tax tax base, they do not have to be included in the income tax return.
In the case of shared prizes in which the prize is distributed among all participants, the 40,000 euros that are exempt must be distributed among all beneficiaries in proportion to their percentage of participation, the Tax Agency points out.
The person who proceeds to distribute the prize must appear as the sole beneficiary (or as collection manager) as he/she has stated so at the time of collecting the prize. This must be able to prove to the Tax Administration that the prize has been distributed to the holders of participations, therefore the identification of each winner, as well as their percentage of participation, is necessary.