One way or another, every gambling activity in the Netherlands is fully taxable. There are some countries where taxing luck-based games is out of the question, but there are also a string of countries with even worse legal obligations and rules when it comes to taxes and gambling.
Fair Market Value On Being Dutch
There are many positives of being Dutch, but in terms of gambling winnings and losses, gambling income, and most importantly - paying income taxes on all gambling activities, gambling winners could do far better in some other countries.
Gambling tax is something you don’t want to joke around in the Netherlands, be it a lottery or slot machines, and tax applies to all of your gambling activities.
Why Can Australians and Canadians Gamble Tax Free?
Canadian citizens, for example, do not pay taxes on their casino winnings because gambling is not considered a viable source of income, so there’s nothing to tax in the first place. The same goes for Australians, and their winnings are not taxed due to the fact that Australian laws do not consider gambling to be a profession, and all winnings are a product of luck.
In those countries, you can become a ‘professional gambler’ only if you are directly related to the gambling industry via some form of legitimate business. If that’s the case, you will pay the gambling tax, but you can also deduct some tax money on grounds of job expenses.
Yes, the Netherlands is probably the most liberal, open-minded country in the world, but federal taxes are no joke. Remember, we are talking about a country where you have to pay an annual dog tax for each pupper you have, so yes - all gambling activities and cash winnings are fully taxable.
Online Gambling Estimated Tax
Let’s start with some good news for casual gamblers and people who love game shows, small-time poker tournaments, or other casino games that involve small gambling losses and winnings. In terms of gambling income tax requirements, you don’t have to bother with reporting gambling winnings lower than 454 euros. In fact, if both your winnings and/or gambling losses are lower than 454 euros, they are not considered as taxable income.
If you have further questions on itemized deductions, federal income tax withholding, and how to deduct gambling losses, please refer to an expert on cash winnings, gambling income, and how to avoid paying taxes whenever you can. This article is intended to serve only as a guideline for all of your gambling winnings and gambling losses.
So, if your gambling winnings are above 454 euros, and your gambling losses are lower, such income is generally taxed at the rate of 29 per cent. Dutch lotteries and gambling companies pay winnings net and withhold taxes before making a payment to a lucky winner.
Needless to say, if you are Dutch and you win a prize in a foreign game of chance, you will have to fill out the gaming tax return. Our advice is to keep an accurate diary or similar record of all your casino gambling winnings and other income related to gambling, such as horse races and wagering pools because good records can save you a lot of cash, time, and nerves.
The Invisible Tax Paid On Our Behalf
Bottom line, both professional or non-professional gamblers (as well as gambling companies) are generally subject to paying taxes on all gambling winnings. Also, while it is not legal at the moment to organize online games of chance in the Netherlands, players are still obligated to pay a gambling tax.
As mentioned before, winners of a national game of chance and other games under the ‘national umbrella’ do not have to pay gambling tax because those payment slips are already sent to the government by the game organizer, on your behalf.
Net Price Vs Gross Price
The gross price is considered to be a casino winning before taxes. Every time you win some money in games of chance, it’s the organizer who’s paying taxes on all winnings, and the remaining sum is your net prize. Net winnings and taxes are a bit different in situations where your winnings are not expressed in money, for example, if you win a non-cash prize such as a car, or a vacation.
Tax money is Part of The Prize
If that’s the case you don’t have to worry about winnings and losses, the tax can be paid by the organizer. On such occasions, the government treats your winnings as if the gambling tax is a part of the prize itself, and your non-cash winnings are totally tax-free. Having said that, it is legally possible to organize a game of chance where the winner of goods and services has to pay taxes, but games of chance are rarely organized in such a manner.
EU Gambling Tax Vs Rest of the World
If you are a Dutch who likes to gamble in international casinos, there’s a silver lining on the horizon. Let’s say you won some cash in a poker tournament, in a casino based outside of the Netherlands, but in the European Union. The good news, your money is safe because all of your winnings are tax-free.
Additionally, your prize money will stay intact upon return to the Netherlands if you have already paid tax on your gambling winnings abroad, for instance in Las Vegas. Nonresident aliens are usually taxed in the country where they scored their winnings, but the gambling taxes and legal procedures vary from one country to another.
Gambling in the USA
Nonresidents of the United States of America are fully taxed at a flat rate of 30%. The IRS requires Dutch citizens to report all gambling winnings on Form 1040NR, and there’s no need to do all the paperwork necessary for American citizens, including Form W-2G, Schedule C, social security number, etc.
Different Games - Different Limits
Winnings subject to gambling taxes are split into several categories in the USA, ranging from bingo or slot machines to keno, poker, and other luck-based games. Keep in mind that different games have different taxable winning limits in The States. For instance, if you win over $1,200 on slots or $5,000 or more on poker games, the payer/organizer/casino must provide you with the form W-2G in order to pay your taxes properly.
If you were lucky enough to replenish your regular earned income with some gambling winnings on an international game of chance, congrats! Now it’s time to pay taxes, more precisely, your monthly positive return. The positive tax return is the sum of all your gambling winnings after you deduct gambling losses from all the bets you have made.
You can find all the information about your tax return in every decent online casino, it’s in your account, so it’s pretty easy to calculate your gambling winnings and losses at the end of the month.
Taxes for Gambling Business Owners
If you own a gambling business, there are plenty of rules you must abide by. They involve tax money, tax return, your income, and plenty of other legal stuff we don’t have the time to explain in detail right now. This article is meant to help you if you are a casual gambler, not an owner of a business directly related to the casino industry.
Taxes, Taxes Everywhere
Simply put, you will have to pay taxes if you want to organize national-oriented games of chance, and/or if you plan to host international online games. This includes slot machines as well as lotteries. The slot owner has to own a legitimate gambling license and every casino game, or machine, should be located in the Netherlands.
If you happen to be Dutch, and you are professionally involved in slot machines, there is a detailed guide just for you, called ‘Handreiking Kansspelautomaten en een juiste administratie’. Look it up, by all means, it’s available online.