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Last Monday, December 22, the traditional Extraordinary Lottery Draw was held, a draw that brings with it the illusion of fixing our lives financially. The Treasury does not need to dream: year after year, the Tax Agency becomes the big winner. The hope of all those who have bought a lottery ticket is to get the 400,000 euros that the Gordo is endowed with. And, then, imagine how we would spend this money if we were awarded. It is worth noting that in this edition 2.772 billion euros will be distributed in prizes, a figure that exceeds last year's distribution by 70 million, since the increase in lottery tickets sold has also been higher.
We remind you that the Treasury will take, as taxes, a part of the prize depending on the amount received.
What prizes are subject to mandatory taxation?
Any prize exceeding 40,000 euros is subject to tax. Therefore, prizes equal to or below this figure are exempt from withholding.
How much does the Treasury get?
In the specific case of the Christmas draw, the State could collect around 175 million euros, assuming that all the shares are sold. Interestingly, part of the revenue collected by the Treasury corresponds to unclaimed prizes.
In addition, the tax authorities apply a 20 percent tax on the amount that exceeds the exempt amount. That is, for the Gordo, of 400,000 euros per tenth, the withholding is applied to 360,000 euros, since the first 40,000 euros are exempt. Thus, the Tax Authorities withhold 20 percent of the 360,000 euros, which is 72,000 euros, and the lucky person is finally left with 328,000 euros net. In the case of the second prize, of 125,000 euros per tenth, the 20 percent is applied to 85,000 euros, once the 40,000 euros exempt have been subtracted. Therefore, the Tax Authorities end up taking 17,000 euros and the lucky person, 108,000 euros. The same thing happens with the third prize, of 50,000 euros to the tenth. The winner keeps 48,000 euros and the Treasury retains 2,000 euros.
How much does the Treasury get?
In the specific case of the Christmas draw, the State could collect around 175 million euros, assuming that all the shares are sold. Interestingly, part of the revenue collected by the Treasury corresponds to unclaimed prizes.
In addition, the tax authorities apply a 20 percent tax on the amount that exceeds the exempt amount. That is, for El Gordo, of 400,000 euros to the tenth, the withholding is applied to 360,000 euros, since the first 40,000 euros are exempt. Thus, the Treasury withholds 20 percent of the 360,000 euros, which is 72,000 euros, and the lucky person ultimately ends up with 328,000 euros net.
In the case of the second prize, of 125,000 euros to the tenth, the 20 percent is applied to 85,000 euros, once the 40,000 euros exempt are subtracted. Therefore, the Treasury ends up taking 17,000 euros and the lucky person, 108,000 euros. The same happens with the third prize, of 50,000 euros to the tenth. The winner keeps 48,000 euros and the Treasury retains 2,000 euros.
And how does the Treasury collect the corresponding portion?
This is done at the time the prize is collected. Thus, this 20 percent withholding has already been applied to the amount received, so the person who won the prize takes the net amount after tax.
And what about shared tenths?
If the tenth prize has been shared, the Tax Authority indicates that the exempt amount, 40,000 euros, must be distributed among the co-owners in proportion to their participation. One person must appear as the sole beneficiary or manager and must prove to the Tax Authority that the tenth prize has been distributed among several co-owners, who must be identified and demonstrate the percentage that corresponds to each one. When going to the bank, one of the participants can go there, who must identify each winner and their degree of participation. The entity will pay the prize to the account of the owner and the owner will distribute it according to the agreement.
Is it necessary to include the prize in the Income Tax Return?
As a general rule, if it is an individual who collects it, it is not mandatory for them to file a self-assessment or include it in their Income Tax Return, as they have borne the corresponding withholding. It is also not necessary to declare it if the amount collected is less than the minimum exempt amount of 40,000 euros. The prizes of the Christmas Lottery are not included in the taxable income of the Personal Income Tax and, therefore, nothing will have to be paid for them in the Income Tax Return. However, if income derived from this money is generated, this must be included in the return.
Can the Treasury be prevented from keeping part of the prize?
Yes. There is a legal method to prevent the Treasury from withholding part of the prize. It consists of taking out insurance for each tenth acquired, which has a cost of around three euros. If luck smiles on you, it will be the insurer who will pay the Treasury 20 percent of the prize in taxes. If you need more information, do not hesitate to contact DATA AND SERVICES