The Christmas Lottery is a tradition as deep-rooted as nougat or Christmas carols. Who most and who least fantasizes about what they would do if they got the Fat and the 400,000 euros per tenth that they distribute. However, before doing calculations, it is best to know that the money will not be collected in full since 20% of that first prize will have to be paid to the Treasury.
The Tax Agency always receives its part through the taxes that must be paid for the Lottery Jackpot. And this first prize is not exempt from tax.
How many taxes are paid for El Gordo
The taxation of the Christmas Lottery and State Lottery and betting prizes is very simple. The first 40,000 euros of the prize are exempt from paying taxes and the remaining amount is taxed at a fixed rate of 20%.
This means that any prize below 40,000 euros is not taxed in personal income tax. What happens to those who do exceed that figure? You only have to pay taxes for amounts that exceed the aforementioned 40,000 euros.
This is how the taxes of the Christmas Lottery work and also the taxation of the new Eurodreams, the Euromillions, the primitive…
How much does the Treasury keep from the first Lottery prize?
How much money will reach your account if you win the jackpot? A total of 328,000 euros. That’s what you will receive if you win the Christmas Lottery. The remaining 72,000 euros will remain for the Treasury.
The calculation of how the prize and taxes are distributed is as follows:
From the 400,000 euros, the 40,000 euros exempt from paying personal income tax are subtracted. A rate of 20% is applied to the 360,000 euros, which is what gives a result of 72,000 euros. What is left over after restoring that money to the 400,000 Gordo euros is what you have left.
How to collect the Christmas Lottery prize
To collect the Christmas prize you have to go to an authorized financial institution with the winning tenth and they will take care of all the procedures.
Most large banks are authorized to receive the winning tenth and pay it by transfer. This operation is carried out immediately and has no cost and may not involve the payment of commissions.
How is the first Christmas prize declared?
The 72,000 euros that Hacienda del Gordo keeps are deposited almost immediately, specifically, as soon as the winning tenth is deposited in the bank.
The bank is in charge of applying the 20% tax as a withholding, so that you will only receive the aforementioned 328,000 euros.
In addition, that money from the Christmas Lottery is not added to the following year’s personal income tax. It is money that is not added to your tax base and does not affect the obligation to file your income tax return.
What happens if the prize is shared?
The taxation of the first prize does not change with the shared tenths, although it may change depending on how the prize is collected.
In order to collect without tax problems, all winners must go to the bank to identify themselves or assign someone responsible to do so. What the financial institution will do is apply the corresponding taxes and then divide the rest among the people who share the tenth. And this exempt limit of 40,000 euros does not apply individually, but to the entire tenth as a whole.
For example, if there are four people, each one would receive 82,000 euros.
What happens if the prize is collected by one person and then distributed? In that case, the person who collects would pay all the taxes on the prize and then they would have to pay the rest in inheritance and gift tax for that donation they have received.
For this reason, it is very important that all winners go to the bank or designate a representative before a notary.