Gambling law and tax in Spain

Anything a bit more specific? Are you worried about being taxed? Are you planning to open a bookmaker in Spain?

I'm thinking about  immigration to Spain and I want bet online  with  no worries.

Anybody know anything about Spain legalising bookmaking, to comply with the Gambelli and Placanica rulings?

moving to Spain ?  i thought every one was moving out of Spain . Hasn't their economy gone a bit pear shaped ?

no problem betting online with Betfair from Spain.

Taxes for punters:

The IRPF (Personal Income Taxation) law is clear: winnings from any lottery/gambling are taxed at the marginal type. Unlink winnings from stock market operations, losses can't be compensated along the 5 years after the loss.

So far I doubt that a single punter has paid a single penny from online betting (be it Betfair, other exchanges or any traditional bookmaker) And the Agencia Tributaria (Tax Agency, commonly known as "Hacienda") doesn't (so far too) seem to be interested in small punters.

Bettting online
Until the beginning of May the situation was unclear and therefore punters were free to do what they wanted and online betting services too.

The previous existing law granted nationwide rights to the ONLAE (Organismo Nacional Loterias y Apuestas del Estado) to organise some lotteries and football bets (Quiniela - run every weekend and where you had to guess the result of amongst 11 to 15 games to receive a price)

Because the ONLAE was already passing around 55% of the income to the "Agencia Tributaria" the winnings from either the Lottery and/or Quiniela were tax free for punters (see above, because anything not organised by ONLAE was subject to taxation)

Each region was then free to pass local regulations and/or organise their own regional lotteries/quinielas. This was never successful.

But as soon as online bookmakers appeared, regional authorities saw the chance to use the existing regulation (and the passive attitude of the government) to make money out of bookmakers. Some regions issued regional licenses and some bookies paid some (small) money to get them.

This was chaotic and the government finally passed a law: bookmakers will need to apply for a license and will have to pay taxes in Spain.

But the law allows (so far and the later ruling developing the law with practical implementation guidelines should not change it) online betting.

Thanks for posting, pilgrim.  Interesting.

Bookmaking (not online) is still illegal here in Andalucia, in fact I have recently been raided. Again! Any information about when they will conform to the European rulings and allow me to open a shop legally?

Once you've taken a long hard look at their tax laws living in Spain becomes a much less appealing proposition.

Example please hippie ?

@timbuctooth,

Betting shops is another phenomenon that has been growing under the lack of a proper law to regulate gambling in Spain (beyond that offered by the ONLAE, as the Regions failed to develop any sensible offering)

European rulings are being superseded by laws passed by the countries because the EU left it open for the countries to do it.

And I fear that betting shops will have to group under a common brand to be covered by a license and therefore avoid being raided.

@Fine

I guess that Hippie is, amongst other things, referring to my post above.

Imagine that with your gambling skills you made €100,000 profit. Whereas in the UK that is 100% tax free, the situation changes in Spain.

More or less (I don't have the actual steps) the thing would go like:

First €20,000 would be taxed at 22%
Next €10,000 would be taxed at 28%
Next €10,000 would be taxed at 34%
Next €10,000 would be taxed at 38%
Next €50,000 would be taxed at 42%

And on top of that you have to add a region percentage (usually up to a maximum of 6%, although some regions choose not to charge it). Of course there would be some tax deductions to apply, but that's the general scheme.

If you had a regular job, then you would have to add your gambling profits on top of the regular income and follow the same scheme.

So if for example you made €60,000 from your daily job ... all your gambling profits would be taxed at 42% by the Tax Agency (plus the possible regional 6%)

If you don't declare it, what are the chances of you getting caught ? Particularly if you were an expat with a residency floating between Spain and elsewhere ?

saint, yes I am referring to the fact that a gambler currently residing in the UK (or Ireland) would be moving from a tax free environment to a taxable one but I'm also concerned that Spanish residents are taxed on total worldwide income. That's a deal breaker plus the tax allowances seem less generous than many other parts of Europe.

btw, do you know how this soon to be introduced Gambling Act will affect in-play betting in Spain?

FAFH, don't spend 183 days of the year in Spain and you won't be subject to their taxes. Bubel is talking of emigrating though which would make it more difficult to duck the authorities.

@fine: The chances of getting caught are non existent as of now. But that's only because the Tax Agency hasn't decided that those targets are worth the time and effort (they still have to sort out many other types of fraud)

But it is obvious that because the new law makes it compulsory for bookies to register for a license, a direct communication between the bookies and the Tax Agency is going to be in place, sooner or later. And you may imagine what that implies ... (same as banks automatically notifying the interests generated by your savings accounts and your employer automatically notifying your total income)

@hippie: In-Play betting is not affected (but as stated above the fine details are left to the development of the law implementation rules and one never knows ...)

When I looked into this a few years ago it seemed to be that If you are from the UK and live in Spain then any Spanish income is taxed at a fixed % and any income earned in the UK is still taxed in the UK.

This effectively means that Betfair profits are still tax free as they are UK income...

That was my understanding, but I may have it wrong.  I didn't move to Spain then so didn't check any further.

The Spanish tax system has always been progressiveand never had a fixed %.

And with regards to tax free profits, that statement is just like one from a Spanish guy (about 3 years) in this same forum.

He moved 3 days before the end of the year to the UK and notified the Spanish authorities of the fact and he was asking if he would be subject to taxation in Spain for his gambling profits... and the answer (surprisingly) because he had spent most of the year in Spain was: yes!

His next question was: "and if I don't withdraw the money from Betfair?" And the answer was: "and if you don't withdraw the money from your bank or broker, is it still subject to taxation?"

It's all about where your fiscal residence is. Of course a professional can find 1001 holes in the system to have you paying the least possible amount ...

Let's face it, unless you are make a very, very large amount of gambling profit on BF, the Spanish tax authorities are very unlikely ever to discover it.
Unless of course BF have to report the status of all accounts owned by Spanish fiscal residents to the authorities.
Do they do that ? In any case the residency stated on your BF account does not axiomatically equate with your fiscal residency.

laptop in spain, win money, no problemo hey presto!!!

@fine,

Exactly what you say is what I posted in the first explanation of how things work today. Which is no guarantee of how they will work tomorrow.

But statements about profits being "tax free" because they are UK income are wrong and may confuse people.

And as soon as the mechanisms of the recently passed law (less than a month ago) are implemented, rest assured that status of accounts will be shared with the authorities.

And if the tax authorities become interested (which is the first needed condition) and investigate it won't take them long to put two and two together, no matter which residency you may declare.

Sure, some people will always find ways to overcome these subtleties, but again: let's not confuse people with wrong statements about profits being tax free because they are UK income (even if Mr./Mrs. doridoru has so far, like all other gamblers in Spain, not had any problem)

St Pilgrim
Don't you think that even if the Spanish tax athorities ever get organized and efficient enough to try to monitor and collect tax on offshore online gambling profits, they will have a fairly high threshold of what level of profits that would be interested in investigating ?

Btw I'm not disputing your correct statements about the technical taxability of the overseas income of Spanish residents, but I think we both know that tax evasion is rampant in Spain and online gambling taxes would surely be a long way down the totem pole of the colection enforcement officers.
I for example would have thought things like the "black " commerce  of onshore real estate transactions might just get more attention for the foreseeable future.
I'm not encouraging people to break the law, but unless you're a huge gambler ( and if you were you would know all this stuff) I wouldn't be put off mooving to Spain if you're currently dabbling moderately successfully on BF.

Fine,

Of course you would always have to go over a certain threshold to become a target. That's the reality. But it is also true that a number of random inspections happen regardless of your income every year. I just wanted to clear the situation, in case someone decided to trust advice from the forum and then suddenly be hit with an unexpected tax charge.

Like I said above, bright minds (those on Bf?) can surely find ways around, be it the case they exist. Seeking professional advice is always good.

The problem for some may be that the lack of liquidity in public administrations in Spain will push the government to look for additional "revenue streams". Fighting VAT fraud has been the major target during the last 2 years, but someone may decide to also start collecting from small previously unexplored sources.

And although the Real Estate market, as you correctly point out, was a target due to the amount of "black" money exchanged in each and every transaction, it is no longer a high priority, due to the stagnation of the market (possibly to last a lot longer than most wish)