Winning €4,999 instead of €5,000 can be more beneficial due to tax implications. Prizes from the Jogos Santa Casa exceeding €5,000 are subject to a 20% Stamp Duty Tax, reducing the winner’s take-home amount.
This rule applies to all state social games, including Euromillions, Totoloto, Totobola, M1lhão, Raspadinha, Lotaria Clássica, Lotaria Popular, and even Placard, all managed by Santa Casa da Misericórdia de Lisboa.
Tax-Exempt Prizes
Consumer advocacy organization DECO PROTeste highlights that only prizes below €5,000 are tax-exempt. For any amount above this threshold, a 20% tax is applied to the excess, withheld at the source by Santa Casa da Misericórdia de Lisboa, which then transfers it to the tax authorities.
For example, a €20,000 prize results in €17,000 for the winner, as €3,000 is retained as Stamp Duty Tax.
TV Lottery Prizes
In contrast to the state-managed games, TV lottery prizes typically have the tax already deducted, and the announced amount is net of taxes.
Nevertheless, before participating, it is advisable to read each game’s regulations to understand the terms and conditions. Note that taxation not only applies to winnings but also to the purchase itself. When buying a bet in a state social game, a 4.5% Stamp Duty is immediately charged.
Reporting Prizes on Income Tax?
Prizes are not subject to income tax (IRS), implying no impact on the winner’s tax return. However, upon receiving a tax-free prize, the winner will receive a statement from Santa Casa da Misericórdia. This should be kept for four years in case of a future tax audit, as sudden asset increases might attract the attention of financial authorities. The statement can serve as proof of the money’s origin.
‘Jackpot’ was €213.8 million. The state is expected to earn approximately €42.8 million.
Notícias ao Minuto | 09:11 – 26/06/2024
