Taxation of prizes in Spain: what you actually take home
A €100,000 prize can be cut in half by income tax and wealth tax. Here's how much the Spanish tax office takes depending on the type of draw and region.
English · Original discussion in Spanish · Published
Taxation of prizes in Spain: what you actually take home
A TV game show contestant has just discovered that his prize wasn't what it seemed. The scene is a familiar one: he smiles at the cameras while holding a giant cheque, but the tax drama begins when the tax return comes due. In Spain, how prizes are taxed depends on their origin and the amount, and the result can be devastating.
State lottery and ONCE: the false relief of 20%
For ONCE or State lottery prizes, the tax office only taxes the portion exceeding €40,000, at 20%. It seems like a favourable deal, but it ignores the wealth tax applied every year on the total accumulated. If the prize exceeds €5 million, the most sensible option, according to some analyses, is to move to an EU country without a wealth tax.
All other prizes: income tax from the first euro
TV game shows, private draws or any other non-state prize is taxed as capital gains under income tax (IRPF). This means it is added to the taxable base and pays the marginal rate, which can reach 30% at the national level and up to 47% in regions such as Andalusia. There is no exempt minimum: every last cent is taxable.
What is the money raised used for?
The official line is that taxes fund public services. Some argue against this, claiming that the State goes into debt to spend and uses taxes to pay interest on the debt, while the mass of taxpayers works six months a year for the taxman. With big prizes, the debate turns more bitter: the perception of plunder clashes with the need to fund a system many consider unsustainable.
The conclusion is simple: if you win a prize, don't celebrate until you know how much the tax office keeps. And if it's a multi-million one, start looking at flights to Andorra.
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A TV game show contestant has just discovered that his prize wasn't what it seemed. The scene is a familiar one: he smiles at the cameras while holding a giant cheque, but the tax drama begins when the tax return comes due. In Spain, how prizes are taxed depends on their origin and the amount, and the result can be devastating.
State lottery and ONCE: the false relief of 20%
For ONCE or State lottery prizes, the tax office only taxes the portion exceeding €40,000, at 20%. It seems like a favourable deal, but it ignores the wealth tax applied every year on the total accumulated. If the prize exceeds €5 million, the most sensible option, according to some analyses, is to move to an EU country without a wealth tax.
All other prizes: income tax from the first euro
TV game shows, private draws or any other non-state prize is taxed as capital gains under income tax (IRPF). This means it is added to the taxable base and pays the marginal rate, which can reach 30% at the national level and up to 47% in regions such as Andalusia. There is no exempt minimum: every last cent is taxable.
What is the money raised used for?
The official line is that taxes fund public services. Some argue against this, claiming that the State goes into debt to spend and uses taxes to pay interest on the debt, while the mass of taxpayers works six months a year for the taxman. With big prizes, the debate turns more bitter: the perception of plunder clashes with the need to fund a system many consider unsustainable.
The conclusion is simple: if you win a prize, don't celebrate until you know how much the tax office keeps. And if it's a multi-million one, start looking at flights to Andorra.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (12 replies).
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