A trip? A new car? Or even buy a house? If you have these dreams and are a fan of the lottery, scoreboard, scratch card and the Euromillions jackpot, be aware of the tax you will have to pay to the State for the prize, which may be less generous than advertised.
Deco Proteste explains that if you are awarded a prize of more than 5 thousand euros you will be subject to a stamp tax of 20%. This rule applies to all social games in the State, which include Euromilhoes, Totoloto, M1lhão, Scratchcard, Lottery Clássica, Lotaria Popular and Placard (games marketed by Santa Casa da Misericórdia de Lisboa).
Only prizes below 5 thousand euros are exempt from taxation. From then on, the 20% tax is applied to the portion of the premium that exceeds this amount, being withheld at source. In the case of games traded by Santa Casa da Misericórdia de Lisboa, this institution will then be the one to withdraw the amount and hand it over to the Tax Authority.
For example, if you win a prize of 20 thousand euros, know that you only ‘see’ 17 thousand euros, because 3 thousand euros correspond to stamp duty, which will be immediately deducted.
“Contrary to what happens with the games at Santa Casa da Misericórdia de Lisboa, which manages all games of chance in Portugal, in television draws, normally, the announced prize corresponds to its net value, that is, the value of the tax of the stamp has already been deducted”, says Deco Proteste.
Still, always pay attention to the respective regulations to stay up to date with the terms and conditions of each game.
Deco emphasizes that taxation does not only affect the value of the prize, but also when purchasing: when placing a bet on a State social game, you pay 4.5% at the time of purchase as stamp duty.
In summary, although in some countries Euromillions prizes are tax-free, in Portugal, stamp duty is applied to prizes exceeding 5 thousand euros23.
In conclusion, please also know that the prizes are not subject to IRS, so they have no implications for the winner’s income declaration. If you are eligible, when you collect the prize, which is already tax-free, you will receive a declaration from Santa Casa da Misericórdia that you must keep for four years, in the event of a tax inspection taking place in the future. “Sudden increases in assets can attract the attention of Finance services, so you can prove the origin of the money”, concludes Deco.