- The main tax law is that gambling winnings are subject to a betting duty of 2%.
- Section 613(2) of the TCA states that winnings from betting are not chargeable gains. No similar statements have been made regarding income tax in the document.
- Not all forms of betting are taxed.
- Tax laws apply to traditional and non-traditional forms of betting. Online casinos in Ireland and remote casinos are also taxable.
- The badges of trade are rooted in the context of the acquisition and disposal of assets. These are applied in situations that involve the exploitation of property rights or the provision of professional services.
- A very small portion of gambling wagers is subject to taxation.
- If you are confused about whether your brand of betting is taxable, contact a tax professional for advice and support. Their service and tax tips can clear your confusion while advising steps for disclosures.
The History of Gambling in Ireland
Gambling has been legal in Ireland for over a hundred years. But, as with any other law, the regulations have changed over time. It is interesting to note that betting is not defined in Irish law. The Betting Act states that the word also encompasses a bet that involves a betting intermediary or company assigning fixed odds to a future event, like accepting bets on an event and paying a profit. Much like Finnish online casinos, Irish casinos are regulated by a state monopoly.
Let's take a brief look at the various betting laws and regulations implemented in Ireland over time.
In 1954, the first piece of legislation to regulate gambling was passed. This act laid the basis of rules that governed the use of houses and offices for betting procedures. It also outlined penalties for offenders for money laundering and the wrongful possession of real estate.
In 1956, the Gaming and Lottery Act was passed. This legislation sought to increase casino gambling in Ireland, little by little. Commercial casinos were banned. However, private member clubs mimicked the activities of casinos. Poker and other games like craps were popular at these establishments. However, member clubs are considered secondary in this context. A provisional law allowed casino games to be played for real money. The law permitted lottery holders to host lotteries but stipulated that the total value of prizes could not exceed €343. The value of every prize was to be stated clearly and made bold on each ticket or coupon issued.
It was illegal for minors under 18 to be in an Irish betting shop. This established the legal age for betting as 18. Previously, the age was lower, at 16. To place a bet or buy a lottery ticket today, you must be 18.
Alan Shutter sponsored the Gambling Control Bill of 2013 as a private member bill. The bill sought to strengthen the online Irish casinos and offline regulation of the gaming industry. In addition to improving the mandate, the bill would have made it legal to open several dozen regular casinos in Ireland. Largely, this would have effectively transformed the landscape of gaming and gambling in Ireland.
The Betting Act of 1931 was amended to include all remote operators regardless of where they were based. Operators were responsible for regulation and taxation in Ireland if the operator accepted a bet from someone based in the country. Operators must be licensed and taxed to accept bets. This creates a strict system that curtails tax evasion.
The Gaming and Lotteries Act of 2019 was passed, amending the original Gambling Act of 1956. This legislation stated that promoting gambling without a licence or permit is illegal and that such an act is punishable by law. Under the same act, gaming establishments can be opened with a licence in the country.
Why is Gambling Taxed?
Gambling is taxed in most countries to discourage excessive gambling, as it can be detrimental to the quality of life and progression. Gambling is very addictive and you should strike a balance, only playing in moderate to small amounts from time to time. Our responsible gambling guide offers a lot of information for anyone who's struggling with addiction.
A Brief Overview
Many professional gamblers and tax professionals believe that gambling winnings are not subjected to income tax. However, in Ireland, among many countries, courts claim that winnings from casino houses, much like wages, can be taxed. People are simply not aware of the activities around tax returns. This lack of information is a misstep on an individual level and on the part of the state. Taking an interest in tax situations can only help you out as a member of the gambling industry. In Ireland, in recent times, certain types of professional gambling and systematic card playing (for example, poker, baccarat, and blackjack) are considered taxable activities. It should be noted that spread betting is not subject to either capital gains or income tax.
This exemption from Capital Gains Tax (CGT) is based on the tangibility of the asset - in a spread bet, you don't bet on something physical, just the movement of an underlying asset. Winnings from bettings, lotteries, sweepstakes, and games with prizes are also exempted from capital gains tax. No CGT liability applies to the prize winner. In addition, if the prize winner disposes of property, the base cost of the asset is determined by its market value on the date it was acquired. CGT will be calculated on any rise in value from the date of acquisition.
However, remember that Ireland's betting tax is a 2% flat rate on the amount wagered by the gambler. In other words, the government taxes the amount bet, on any given game, at a meagre 2%. By international standards, these requirements are extremely low. In addition, it does not take into account some forms of betting at all. Therefore, in Ireland, winners do not have to worry about gambling being considered a highly taxable income. This is a massive advantage for the people of Ireland.
Betting is considered a form of consumer spending, and Value Added Tax is the principal method of taxation on consumer spending in Ireland. VAT rates are tiered in different countries. It is very low for items, products, or services deemed essential. Gambling is exempted from liability for VAT by the 1977 Sixth Directive, which has been amended over the years.
The betting tax in Ireland has been broadened to cover remote and online casinos. However, on the advice of the Commission on Taxation, the tax hasn't been raised due to a lack of experience with a broader tax base. In Ireland, betting tax revenue has declined significantly over the years because the tax rate has been reduced over time. At one point in history, there was a 20% turnover. However, since then, it has been gradually reduced to 10%, then 5%, then 2% until they finally settled on 1%. The difference between the applicable tax has reduced evasion significantly. But this, combined with increased betting turnover, has failed to change the huge implications of these massive tax reductions.
A Timeline of Betting Taxation
Until 1986, betting duty in Ireland was collected as paid, which means it was added up-front to the amount of bet placed. The tax was 20%, and there is no doubt as to the question of widespread evasion. 20% was seen as a massive penalty in the form of a tax rate, and many winners went to a great extent to evade taxation. The 20% tax rate was considered irresponsible, which led to further deductions. By 2006, the tax was not paid on (up-front), and it was dropped to 1%. Previously, the tax was collected overtly from the customer - it was built in as fees into the wager placed - a €10 bet would cost €10.20 in the shop.
In 2015, the Betting Amendment Act provided a regulatory system for betting intermediaries and remote bookmakers - internet and mobile betting providers. This includes online casinos. These are known as betting exchanges and offer betting services from all over Ireland. This was done to extend the betting duty to remote players and operators, widening the tax base and preventing revenue leakage.
Before this amendment, the tax was only payable on bets with traditional off-course bookmakers. The act also introduced a 15% commission tax on betting exchanges. As of 2019, the betting tax was increased from 1% to 2%, and the commission tax was set at 25%.
Remote bookmarkers also pay excise duty at 2% on bets entered with Irish customers. Casinos operating as private member clubs should register and charge VAT at 23% on their customers' winnings. However, you must note that there is a downside to these tax laws as well. You cannot write off any of your losses. You have to report them and they are not deductible. In addition, a large part of government income is derived from gambling activities. Companies are taxed 12% of their profits.
The Future of Gambling in Ireland
The gambling industry is bound to grow in the future, creating competition among players and various Irish online casinos. People are realising that gambling isn't only a fun way to pass time; it also carries the potential to win money that is minimally taxed. Around 82% of players use online casinos, while the government has issued over thirty licences to casinos and machines over the last two years. Once offshore casinos begin to comply with rules in Ireland, they're also bound to become common in the country.
Is gambling legal in Ireland?
Under the Betting Act of 1931, it is illegal for minors under 18 to be at a betting establishment. The legal age for betting is 18. You must be 18 years old to be eligible to place a bet or purchase a lottery ticket. This includes sports betting.
Is gambling online also taxable in Ireland?
Yes, gambling online is also taxable in Ireland as of 2015. The Betting Act was amended to include remote bookmakers and betting exchanges.
What is recordkeeping, and how do I do it?
To deduct your losses, keep a detailed and accurate diary/excel sheet of your gambling winnings and losses. You should also be able to provide receipts, tickets, statements, or other records showing your winnings and losses clearly.
In order to do this correctly, the record should include the following: Date, type of gambling activity, name and address of the event or the area it took place, names of other people who partook in the activity, the amount of winnings and losses
What is gambling income? Is it taxable?
In Ireland, gambling incomes are taxable at 2% of the wager placed. Gambling income includes jackpots and winnings from lotteries, raffles, casinos, horse races, sweepstakes, raffles, dog races, and much more. Winnings can be cash or the fair market value of prizes won, like cars or trips around the world. In some cases, if gambling is an occasional hobby instead of a source of income, it is not taxable. Unemployment doesn't fully exempt you from being a taxpayer. If you don't work and use gambling to earn money, you have to declare it on your tax returns.
How can I report gambling winnings and losses?
You must report gambling winnings and losses on your tax returns. Contact your tax professional for more details to follow the process thoroughly and accurately. In the US, you file a w-2g/w-2/schedule c form to report your gambling. Schedule a meeting with a professional for tax advice and calculations. They use resources like tax software, e.g. TurboTax, that overcomes the limitations of human error.
Have You Found What You're Looking for?
Your feedback is paramount!