In search for sources for Italy’s 2020 budget, the country’s government could move to introduce a maxi-tax on super winnings from lottery games, multiple Italian news outlets reported after catching a glimpse of next year’s budget draft.
Under a proposal by Italian lawmakers, winners of big lottery jackpots, that is to say amounts exceeding €100 million, will be required to pay a 23% tax on their winnings, up from the current 12% levy.
News about the potential new tax rate on big lottery winnings emerged shortly after an anonymous Italian stepped forward to claim a €209 million jackpot after correctly picking all six numbers in SuperEnalotto, a locally popular lottery game organized by major Italian gambling operator Sisal.
If the proposed 23% tax rate was in force, the fortunate player would have felt a little less fortunate as they would have had to part ways with €48 million of the total amount they won. That sum would have been funneled to state coffers. With the current 12% tax on winnings, the lottery winner will have to pay a little over half that amount in the form of taxes to the government.
Last year’s budget-making, too, involved adopting new gambling tax provisions as the country was struggling to meet European Commission targets in relation to the reduction of its deficit. The Italian Parliament eventually approved a budget plan that, among other things, included increased tax on online casino and online and retail sports betting operations.
As from January 1 of this year, online casino operators are required to pay a 25% tax on gross gambling revenue, up from 20%, while online sports betting operators are required to pay a 24% on revenue, up from 22%. Retail betting operators are taxed at 20% on revenue, up two percentage points. The new tax regime is expected to generate an additional €80 million in gambling taxes.
Looming Tax on Smaller Lottery Winnings
Aside from an increased tax on big lottery wins, reports from local media outlets suggest that a levy on smaller wins could also be lurking. At present, winnings of under €500 are exempt from any taxes. However, that could change from next year, it has become known.
The Italian government is reportedly mulling the implementation of a 12% tax on winnings of under €500, which currently represent the majority of lottery winnings. It is important to note that, if implemented, the new tax would apply not only to lottery wins, but also to other types of winnings collected by local gamblers, including winning sports bets.
The government’s plan involves a progressively growing rate on gambling winnings that will increase along with the value of those winnings until it reaches the absolute maximum of 23%.
Reports of the new tax on smaller winnings have already prompted backlash, with critics arguing that the move would result in a decrease in the lottery’s annual profits. Data shows that around €100 billion are annually played on lottery games in Italy. However, just around €20 billion are leaving gambler’s pockets, while the remaining €80 billion represent replayed winnings.
For instance, if a player wins €5 from a scratchcard, they are more likely to invest their win into another scratchcard instead of collecting it. With the new 12% tax, the win would go down to €4.4. With that, a player is more likely to collect their winnings instead of spending €0.6 to buy another scratchcard. The same could apply to a winning sports bet. As a result, the amount of replayed winnings would decrease, which would, in turn, result in lotteries and other gambling operations losing money.
Source: Giochi, tassa sulle micro-vincite: stangata sul jackpot del Superenalotto, IlMessaggero.it
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