Date: 08.04.2024

by Adam Dworak

Spain Intensifies Tax Oversight on Online Gambling Winnings

In a significant move, the Agencia Tributaria (AEAT), Spain’s Tax Agency under the Ministry of Finance, has mandated that Spanish consumers declare profits from online gambling winnings in their 2023 self-assessment income tax returns.

Directed by Soledad Fernández, AEAT’s increased scrutiny extends to cryptocurrency transactions, property rentals, and foreign income, highlighting a comprehensive approach to tax regulation.

A New Directive for Online Gambling Profits

For the first time, AEAT has issued directives specifically targeting profits from online gambling. Out of the 2.9 million notices dispatched to taxpayers ahead of the 2023 income tax filing period, 164,000 were related to online gambling profits.

This marks the Treasury’s initial focused effort to regulate the burgeoning online gambling sector, reflecting the government’s intent to bring transparency and accountability to this rapidly growing industry.

Broadening the Tax Net

The spotlight isn’t solely on online gambling; AEAT’s net is cast wider, with a million notices sent out concerning undeclared cryptocurrency trading profits. In 2022, AEAT received authorization from the Ministry of Finance to amend Tax Module-190, ensuring the reporting of gambling prizes/winnings under €300—a significant change affecting 2023 tax filings.

This adjustment means that Spanish taxpayers with an annual income over €22,000 are now required to disclose winnings of €300, a substantial reduction from the previous €1000 threshold.

Structured Tax Framework for Gambling Winnings

AEAT has established a five-tiered tax framework for sports betting and online gambling winnings, with rates ranging from 19% on winnings up to €12,450, to 45% for winnings over €60,000. This structured approach aims to create a fair and scalable tax system for gambling profits, ensuring that higher winnings are proportionately taxed.

Streamlined Tax Filing Process

In response to these changes, AEAT has simplified the process for taxpayers to amend or submit specific declarations on gambling, crypto, and foreign income transactions. The system is designed to automatically handle modifications in filings, facilitating a smoother tax declaration process for the public.

Controversy and Criticism

The Ministry of Finance’s decision to modify tax modules on gambling has not been without controversy. The Partido Popular (PP), Spain’s Conservative Party and primary opposition, criticized the move as an ‘unnecessary and punitive tax on recreational consumers’.

This criticism underscores the balancing act between regulatory oversight and maintaining an environment conducive to recreational activities.

Our Comment on the Article

AEAT’s initiative to regulate and tax online gambling winnings reflects a global trend towards greater transparency and accountability in the gambling industry. While the move has sparked debate, it underscores the importance of adapting tax laws to keep pace with the digital economy’s evolution.

As the industry continues to grow, such measures may become increasingly common, balancing the need for government revenue with the rights of consumers and operators in the gambling sector.