The Spanish Ministry of Finance has clarified the taxation laws of online gambling profits, and lottery and betting winnings. Rules state online gambling losses cannot be offset against income tax and can only be used to lower capital gains derived from online gambling activities.
Effective at the start of 2013, Spain’s Law 16/2012 was published in the Official State Gazette on 28th December 2012, adopting various tax measures aimed at boosting economy activity. It allows gambling losses to be discounted from winnings in the same taxable period, effectively reducing the net capital gain. The law brings the Spanish internet gambling regulatory system more in line with other countries.
Personal income tax exemptions for winnings obtained from prizes and lotteries has been eliminated, although these gains will not be included in the personal income tax base. Betting and lottery gains in excess of €2,500 (US $3,202) are subject to a 20 percent rate of taxation. This differs from most European countries, where players are not subject to taxes from online gambling winnings.
Taxation in Spain is similar to the system in the US, with all profits derived from gambling classified as taxable income and must be declared as compensable losses with gains up to the amount of reported earnings. The Ministry stressed that the tax reform is standardised and does not provide preferential treatment for any operators.
After undergoing a series of compliance checks, on 1st June 2012, 53 companies were granted a license to operate internet gambling in Spain. During the 2012 fourth quarter, gross internet gambling revenue stood at €61.4m on €1.36bn online wagering handle. Sports betting accounted for nearly half of the market at 48.4 percent, with casinos only at 12.4 percent, as online slots continue to sit in consultation.
Agencia Tributaria – Website: AgenciaTributaria.es