What is a tax on winnings in Russia?
In 2016, Russian officials continued to strengthen the control over the gambling activities and revenues generated from them. A new restriction was introduced in 2014: from now to get your winnings from a casino or a bookmaker you must show your passport. This change was made at the suggestion of the Ministry of Finance. The measure is intended to control the players’ income and make the tax on winnings more transparent.
We decided to investigate the subject of taxation in the gambling business and answer important questions for many people: why is there a tax on winnings in Russia how is it calculated and what is the punishment for not paying the tax?
On this page, you can find more details about the taxation on winnings in Russia. The presented information is from September 2016.
Generally speaking, there is no tax on peoples gambling activities but rather a tax resulting from winning. In Russia, the single income tax rate is 13%. This rate applies to all winnings, except for winning a promotion (lottery) which is going to be described below. By the way, a 13% tax rate is something that European or American players can only dream. In these countries, the taxes on gambling are very high and can even go up to 50%. So now we know how much we will pay in taxes if we win something from gambling in Russia. But how we do that?
Taxes on winnings in online casinos
Everyone knows that in the Russian Federation it is forbidden to offer games of chance outside the gaming zones. Is it legal to play in an online casino? This question is trying to give a definite answer because, on the one hand, gambling for money is forbidden on the Internet, but on the other hand, the legislation does not provide administrative or criminal liability of an individual for taking part in gambling. However, a player is obliged by law to pay tax on winnings in online casinos.
Submission of declaration
Taxes on all income derived from gambling are subject to the statement when filing a tax return, which can be downloaded from the website of the Federal Tax Service or taken from the nearest tax office. The Declaration served until April 30 of the year following the reporting period. The date of the receipt of income is considered to be the day when the money has been withdrawn from the gambling establishment via a bank account or an e-wallet. For example, if the player has won money in online casinos on December 3, 2014, and received it on December 20 the same year, he must submit a declaration no later than April 30, 2015. If he withdrew the money on January 1, 2015, for example, the tax return is filed in 2016. Since online casinos are not RF tax agents and hardly aware of the intricacies of taxation in Russia, they will unlikely give you documents that can serve as the basis of your income verification. In this case, with the tax declaration, you must give in verification documents which will show that you have won money such as a bank account statement.
Expected tax calculation
Let's try to understand how to calculate the tax amount. Taxes are subject to the entire amount of money withdrawn from the casino, without considering previous bets. For example, you bet $100 on red, and you win. You have $200 in your account. For this winning amount, you must pay a 13% tax of $200 or $26. In this case, it would be difficult to prove that your actual income was only $100. Particularly disappointing is if you lose them again in a couple of days, but you still have to pay tax.
That's why many players are trying to rid the casino for "extra" money by not playing.
The second issue: as a rule, we bet and get the winnings in a foreign currency, but the taxes are paid in rubles. What’s the time frame between the date of winning and the payment of the fee? According to the tax code, in this case, the conversion is made in rubles at the exchange rate on the date of the income receipt. For example, you won on February 12, 2014, brought the money at stake on June 3 the same year, and the tax you have to pay is before July 15, 2015. In this case, the conversion of the tax amount shall be at the rate of June 3, 2014, which is specified on the website of the Central Bank of Russia.
In a real casino
What is the situation in the legal land-based casinos in Russia located in the gambling zones? To answer this question, we contacted the customer support at "Casino Oracle" in Azov-City and "Altai Palace" in the Siberian coin. Funny but the operators of both institutions were surprised and confused by the question "Is there a tax on winnings in your gambling facility?" The support agents needed to ask other employees, and with their help, we found that the casinos pay the full amount of winnings. Thus, the lucky player will have to fill out a tax return form. It is somewhat sad and discouraging that taxation is subject to the same amount of money won by all, without taking into account rates and previously lost money.
According to the Federal Tax Service of the Russian Federation, 27 registered bookmakers have more than 5,300 branches. Since 2014 they are all Russian tax agents and withhold income tax on the winnings of its clients. This is perhaps the most orderly and transparent regarding taxes and segment gambling: bookmakers pay winnings in "clean" money, and the institution itself is accountable for the fee for you.
The undeniable advantage is the fact that the tax base is also the net gain rate (but the only one that has played, losing bets are not counted).
For example, you have bet and lost 2000 rubles, and at the rate of 1,000 rubles, you earn a prize of 5,000 rubles. The amount of tax is calculated on net income for the same rate: 5,000-1,000 = 4,000 x 13% = 520 rubles. This is a tax that must be paid for sports betting. It is a simple and clear calculation, but it does not apply to Russian land-based casinos.
If you wagered the same at a foreign bookmaker, the algorithm of calculation and payment of tax on winnings in the bookmaker is the same as in the situation with a win in an online casino. The only difference is that the tax base is calculated the same way as for the Russian bookmakers: winnings minus stake. Apparently, in this case, the player must somehow confirm the amount of the bet and provide a corresponding document from the foreign bookmaker. In our view, it is easier to pay tax on the entire winning amount.
In the lottery and promotions
Is there a tax on winnings in the lottery? You may be surprised, but the revenue of Russian lotteries is 10% of the global lottery market. Of course, the income from the lucky ticket is also taxed at 13%, but there is one notable exception, which we mentioned at the beginning of this article. Many companies organise promotional lottery, and if you're lucky, you will need to pay a tax of between 13% and 35%. This applies not only to money but also to real prizes. Do not be surprised when you will be obliged to pay 35% of its value at the market price. This considerable rate of tax on winnings and prizes is not subject to a sum less than four thousand and rewards of the same value: their recipients are exempt from paying taxes.
You got lucky, and under the lid of a Coca-Cola bottle, you found the car icon Mini. The cost of this car in auto saloons is 2 million rubles. In the tax return, which will apply until April 30 next year, you have to specify the winning car and pay 700 thousand or 35% in taxes of 2 million. If you won the car from a lottery draw, the amount of tax to the winning car would be only 260 thousand rubles (or 13% of 2 million.)
If you live in Russia, but Lady Luck caught you in Las Vegas, Monte Carlo or Rio de Janeiro, it’s doubtful whether you should be congratulated because you will need to pay taxes according to the rules and laws that apply in your country of residence. Luckily, with the majority of countries throughout the world, the Russian Federation has made agreements to avoid double taxation. Therefore, you will need to report your winnings and pay the tax when you return home.
Crime and Punishment
Paying taxes is a duty evasion which is punishable by law. What awaits the player who has forgotten to pay tax on winnings?
- If the tax authorities do not know about your declared income, to begin with, you will be offered to file a tax return and impose a fine of 5% of the unpaid tax for each month of delay.
- In the case where you have ignored this warning, you will be fined for tax evasion in the amount of 20% of its amount.
- Tax evasion on a large scale (100 rubles) is a criminal offence. According to article 198 of the Criminal Code, the player faces a fine of between 100 and 300 thousand rubles or imprisonment for up to six months.
- In the case of tax evasion for 500 thousand rubles (we think that in this case, the winnings should be from 3.846 million rubles). The penalty is increased to 500 thousand, and the maximum term of imprisonment - up to three years.
The tax on winnings from gambling in Russia is 13%, and it is the lowest in the world. An exception is if you are the winner in a promotion (lottery). In this case, you pay 35% of the prize value. The situation with online casinos in Russia is very unclear: on the one hand, Roskomnadzor blocks gambling sites, but Russians are not charged or prosecuted if they want to play online casino games. At the same time, they are obliged to pay taxes on all winnings.
Where to play on the Internet
All partner casinos of our site have a European license (for example Malta, United Kingdom), are not RF tax agents and do not give Russian tax authorities any player information. However, the situation may change in the future. If online gambling becomes legal in Russia, and NetEnt casinos receive a license to offer games to Russian residents, operators may have to provide the authorities with the data of all players, including information on money earned from gambling. Therefore, we suggest that you sign up with a casino that does not require a passport to verify your account.