Have you experienced winning a higher sum in an online casino and assume that there could be a tax for this? Tax law is the most complicated area of law. The following lines shed light on the darkness.
Understanding the Online casino market
People play primarily on online gambling sites (considering today’s situation, people are playing online more than they ever had before). At the forefront are online casinos and sports betting providers. Casinos that have their license may legally provide their gambling offer. The majority of sports betting websites operate also legally. However, many are more convinced by the offer in online casinos because here you can find classics like the following games:
- Poker games
- Roulette games
- Lack Jack games
- Slot Games
A number of online casinos have now incorporated sports betting bids. However, sports betting differs from other games of opportunity because of the five percent state betting tax. This will usually have to be paid by bettors, but the providers often participate. In conventional games of chance like online casinos, however, there is no such tax, so that the “basic principles” of tax law for private individuals and the self-employed apply here.
The Treasury divides the players into amateur gamers and professional gamers
In detail, this means that winnings from online casinos only have to be taxed if the three following conditions are met:
1. You must play regularly
2. You must make regular profits
3. You must make a living from these profits
These are rather unspecific, as you can see from the circumstances under which tax authorities consult when addressing the issue, so they need to be explained in more detail. You play regularly, participating in poker tournaments with friends at the weekend on sites like ‘online casino malaysia‘. However, your participation is only out of a hobby.
With your regular participation, you earn regular profits especially if you have not only won a large poker tournament once. So even if you have a very large sum of winnings from the tournament, the tax office has no right to attack you for tax purposes. Why? This is because the third requirement is missing which says that you have to make a living from playing. So since you have a normal job and other sources of income where playing is just out of a hobby even if done regularly then you shouldn’t be taxed on your winnings.
This video will help you to understand gambling and taxes:
Regular high winnings are rare in online casinos
If the situation is the other way around, then it is likely that sooner or later the tax office will come to you. In order to avoid complications and issues with the tax office, you should take the initiative to report to the state that you make a living by gambling. If you decide to do this you can claim operational expenses and ultimately even losses.