Whenever anyone makes money, the government is going to levy a tax, and gambling is no exception. Gambling tax is handled differently around the world. Some countries offer more favourable terms for the players whereas others offer better terms for the operators. Some countries even offer beneficial terms for both.
The UK gambling tax
The gambling tax in the UK is a prime example of a tax which favours the players. Whenever you gamble in the UK, you don’t have to pay the government a penny.
But this wasn’t always the case. Players used to have a tax levied on either their winnings or on their initial stake. This all changed in 2002 when the tax on players was completely removed to ensure the UK remained competitive.
Around this time, online gambling was on the rise, and the UK government feared the UK gambling industry would suffer thanks to outside competition. Nowadays, the UK gambling industry it as strong as ever, so it seems like the changes in the tax system were a good move.
The UK gambling laws are so favourable to players that you don’t even need to report your earnings to the government even if you are a professional gambler. So if you are lucky enough to make a living from playing Blackjack or Poker, you don’t need to pay any tax to the government from your profession.
Other countries with tax-free gambling
The UK isn’t the only country that has such a favourable taxation system for players. Whenever you gamble in the following countries, you don’t need to pay anything in taxes, on either your winnings or your initial stake:
Whenever you gamble in the following countries, you don’t need to worry about declaring your winnings. If you are lucky enough to win, you get to keep the whole amount!
So who gets taxed?
The gambling industry is huge, so naturally, the government wants to get a slice of the action. In the above countries, the government taxes the operators rather than the players.
In some cases, these taxes can be quite high. In the UK, for example, operators have to pay a 15% tax on their profits. On the other hand, other countries, such as Malta, have an extremely low tax on the operators. This is done in order to encourage casino operators to open up for business in Malta.
What are tax havens?
With certain countries taxing casino operators at such high rates, it’s no wonder they have tried to find ways to circumvent it. One popular method of paying less tax is to operate out of a “tax haven” country.
This is a big reason that you see certain locations popping up so often in the online gambling world. For example, many operators have their headquarters based in Malta or Gibraltar.
Tax haven crackdown
Naturally, governments don’t take kindly to businesses circumventing their tax rates, so it’s not a surprise many countries have implemented measures to stop tax havens. The UK, for instance, has implemented a Point of Consumption Tax. This tax means a company is subject to the tax rate according to where the player is accessing the online casino from. This means if you have a UK-based player, you need to pay the UK tax rate.
Countries that tax players
In many other countries around the world, a tax is levied on players. Generally, this makes things a lot more complicated. Sometimes, certain kinds of gambling are subject to a higher rate than others.
In the USA, for instance, you may need to fill out forms to declare your gambling winnings to the government. Of course, this kind of system is a bit less friendly towards the players, but it does have a silver lining. In the USA, you can also report on your gambling losses, which may entitle you to certain tax breaks.
Do your research
Residents of countries that don’t tax players at all (such as the UK) often get caught off guard when they go abroad and visit a casino. If you are planning on visiting a foreign country and spending some time gaming, make sure you do some research about the local gambling laws. If you don’t do your research, you could inadvertently find yourself in violation of the law.
Otherwise, stick to playing on online casinos in the UK to avoid such troubles. CasinoGuide has all the information you need to pick the right casino for you.