The final of the European Championship also determines the outcome of betting games – and often also who wins the prize money. The decisive factor for the tax question is how much luck has to do with the victory.
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Weeks of football fever will come to an end on Sunday evening with the European Championship final in Berlin’s Olympic Stadium. While sports betting has become a part of professional football, during such major sporting events families, friends and colleagues are busy speculating and guessing about which teams will win the group, how games will turn out and who will win the tournament.
And it’s not always “just” about honor: one or two football fans with the right instinct can certainly look forward to a decent amount of prize money. But how much is left over from these betting game winnings? Do the tax office still collect taxes from them?
Without influence, no taxes
The short answer: No, bettors do not have to pay taxes on such winnings. Because they can neither plan nor influence whether their predictions actually come true. The only way to guess correctly is by chance.
The long answer: Because players have no concrete influence on whether their predictions are correct and whether they come first at the end of the betting game, the tax office cannot ask them to pay for any winnings. Correct tips in a game of chance are simply not covered by the income tax law. In that sense, players do not provide a service over a longer period of time. Therefore, there is no commercial connection between a correct tip and the income generated from it. The payment – the winnings from the betting game – remains tax-free and does not have to be reported to the tax office as part of the tax return. The same applies to a lottery win, which is also tax-free. In all of these cases, the luck factor predominates.
Source: Stern
