Do you have to pay taxes if you win at online gambling?

There are quite a few people who like to gamble online nowadays. Just as a fun pastime and sometimes they even win something. But are the winnings taxed? This is unclear to many people.

As of October 1, 2021, you may legally gamble online at casinos licensed by the Dutch authority. Until then you are actually playing at an unsafe casino. Yet in some cases you have to pay gambling tax in the Netherlands.

We dove a little deeper into the tough subject of tax and have some bad news for winning gamblers. The winnings you make from online gambling are taxed. This is because these are profits from a foreign game of chance. This applies to all games on gambling sites located outside Europe.

Gambling tax

In several lawsuits regarding this issue, the Dutch courts have issued various rulings. It states that the levying of gambling taxes on online games of chance within the European Union violates the principle of equality under the Treaty on the Functioning of the European Union. This is a very complex sentence which simply means that profits made at a European online casino need not be reported to the tax authorities.

All about gambling tax

License of the online casino is decisive

How can a player know if the online casino he wants to play at is located in Europe or not? For this you need to consult the license of the casino in question. The license states the casino’s owner and where it is located. Often online casinos are located in Malta and have a license issued by the Maltese Gaming Authority (the MGA). Malta is part of the European Union, so any amounts you win here do not have to be declared.

In our casino reviews, we have found out exactly where all the casinos are located and what license they have. This makes it easy for you as players to choose. The big well-known gambling sites like Casumo, Royal Panda, Pokerstars and LeoVegas are all located in Malta.

Make sure you check out the casinos to avoid any surprises.



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What if you do have to pay taxes?

Let’s say you prefer to play at an online casino that is not located in the European Union and you win a considerable amount of money there. How do you file a tax return and what kind of tax is involved?

In this case it is about the gaming tax. You have to file your gaming tax return every month. This is inconvenient, but there is no other way. You must have won more than the amount you deposited. However, there is a catch. Suppose you deposit 500 euros and at the end of the month you only have 250 euros in your account. Then on balance you have lost 250 euros. But if in that month you had a profit of 1000 euros paid out by the casino then you still have a profit of 750 euros. This profit must be declared and you must pay 30.1% tax on it. Losses from previous months can unfortunately not be offset.

The best tip we can give you is to play at an online casino located within the European Union. This way you’ll be relieved of these administrative tasks and of the acidic assessments. Not reporting your profits and hoping the IRS never finds out is also an option but that’s one we strongly advise against. Tax evasion is a criminal offence and if they catch you the fines are not faint.

How much is left over after a jackpot win?

Suppose you do decide to play at an online casino located outside the EU and you are lucky enough to win the progressive jackpot on one of the slots. What’s left at the end of the day? Let’s say you get extremely lucky and hit the 1.5 million jackpot. Then you neatly file a tax return of the amount won. Then you pay 30.1% of 1.5 million tax. That is 451,500 euros. A gigantic sum, but it still leaves you with a great sum of over 1 million euros. And you have no more worries about tax assessments. All in all, still a wonderful amount.