Check your tickets today because Tuesday the 22nd is the day of the Christmas draw! But the big winner every year is the State, naturally.
Now, lottery prizes used to be exempt from taxation, right from their beginning until the Rajoy PP administration decided that it wanted 20% of the slice of the cake in 2013, bless their cotton socks.
Take 2018 for example, when the State received 188-million euros from all those tickets that were sold but didn’t win a prize, plus the tax on the ones that did.
In 2013, Sr. Rajoy ‘generously’ decided that the first 2,500 euros of your win, you could keep but above that… well, you could kiss goodbye to 20%.
This threshold, however, has been increasing, so that this year you get to keep, intact, the first 20,000 euros. After that, wham, bang, thank you, Ma’am.
So, this means that if your decimo wins the 4th prize (worth 20,000 euros) you don’t pay tax on it. The eight, 5th prizes wins 6,000 euros, which is yours, too.
Let’s take a look at the big one, El Gordo, which with just a decimo (single lottery ticket costing 20 euros to purchase) you win 400,000 euros. Now, the first 40,000 euros is not taxed, so that’s for you in its entirety. This leaves 360,000 euros that is taxed at 20%, which leaves you with 288,000 euros (plus the untaxed 40,000 euros) and 72,000 euros goes to the State.
The second prize is worth 125,000 euros but you can do the maths on that one!
There are two more things to remember: You pay the tax upon collecting your prize, meaning that the State takes its share before you get it. Make sure you mention this in your tax returns.
Lastly, we both know, you and I, that we’d be lucky to get our money back on one of the tickets, so all of the above is of no relevance, right… or no?
Note: some sources put the untaxable threshold at 20,000 and not 40,000 euros, but don’t worry as Hacienda takes its cut before you get it so you’re not liable to get it wrong!