Should one impose a tax on earnings from gambling, game shows, and lotteries?
Gambling Winnings: Tax-Free for the Average Joe, But Watch Out for the Pros
By Timm Schaffner Edited by Angela Burke Published on: 19.03.2025. Updated on: 30.04.2025.*
According to the Taxpayers' Association, gambling winnings, in general, are not taxable in Germany (illustrative image courtesy of Timm Schaffner).
Casual Gamblers Rejoice!
Thanks to various misconceptions on the internet, the Taxpayers' Association felt it crucial to make it clear that whatever you win from lotteries, sports betting, casinos, or quiz shows, it's yours to keep! The reasoning behind this tax exemption is the "one-time increase in assets", as Daniela Karbe-Geßler of the Taxpayers' Association explains. This exemption applies regardless of your gambling frequency.
So, feel free to dominate the slot machines, sweep the quiz shows, or score big on sports bets—your winnings remain untouched by the tax man, as long as you're not doing it professionally.
Professional Gamblers, Be Prepared!
Although winnings themselves are tax-exempt, the Taxpayers' Association cautions that regular participation in poker tournaments or quiz shows that generate a substantial income may lead the tax office to view your activities as a commercial endeavor. In such cases, the winnings could be considered business profits and thus subject to income tax.
Get Ready for Special Rules with Inheritances and Gifts
The Taxpayers' Association warns that if the value of your gambling winnings is substantial and exceeds allowances, they may become subject to inheritance tax. Be sure to keep this in mind when inheriting or gifting high winnings.
Investment Warnings and Interests
If you choose to invest your winnings, you'll have to pay taxes on any interest earned, as capital gains tax, solidarity surcharge, and possibly church tax apply in Germany.
When in Doubt, Ask Your Local Tax Office
Finally, remember that individual case examinations may be necessary to determine the tax relevance of your winnings. It's essential to seek advice from your local tax office if you're unsure about how to assess your winnings for tax purposes.
Note: While the Federation of Taxpayers offers valuable insights on tax-related matters, they are an association and not an official authority.
Sources: [1] Taxpayers' Association, [2] Federal Fiscal Court, [3] Institut der deutschen Wirtschaft Köln
Enrichment Insights
- Professional vs. Casual Gambling: While the Taxpayers' Association does not explicitly discuss the distinction between professional and casual gamblers, German tax law does not seem to differentiate when it comes to taxing winnings. However, there is a possibility for professional gamblers to face taxation if their activity is deemed a trade—that is, if they participate frequently and with a profit intent.
- Recent Developments: Germany has discussed shifting to a gross gambling revenue (GGR) tax model for operators, which could change the tax landscape for both players and operators. However, as of 2024/2025, no changes to player taxation seem to be imminent.
- Daniela Karbe-Geссler, a representative from the Taxpayers' Association, explained that the tax exemption for gambling winnings is due to the "one-time increase in assets".
- Although winnings are not taxable, participating regularly in poker tournaments or quiz shows that generate a substantial income may lead the tax office to view it as a commercial endeavor.
- If the value of gambling winnings is substantial and exceeds allowances, they may become subject to inheritance tax when inherited or gifted.
- Winnings that are invested will be subject to taxes on any interest earned, with capital gains tax, solidarity surcharge, and possible church tax applying in Germany.
