First of all, congratulations on your lottery win! You probably already know how much your prize is, but one question remains: how much will I actually get paid? And that depends, of course, on how much will be deduced for fees, taxes, etc. For this, there are several scenarios.
Before we talk about those scenarios, we would like to mention some important facts regarding our services at RedFoxLotto. First, we do not deduct any commissions from your winnings. We process your lottery winnings free of charge, even if we handle the contact with the lottery authority on your behalf. Some online lottery operators may charge a percentage of your winnings – we believe that this is not a good business model.
There may be a charge for processing your payments, especially if you decide that the money should be sent to you via bank transfer. Such a charge would be whatever the bank we send money from charges us. Your own bank may also charge a fee on their end. Other payment processors may charge fees for money transfers as well.
In any case, those charges will be rather insignificant smaller amounts. Bank transfers across borders can be expensive. That means that it does not make much sense to withdraw an amount smaller than 50€ via bank transfer, because you would only receive a much smaller amount in your account after deduction of fees.
If you played the lottery in the traditional way, by purchasing your ticket at a lotto shop in your own country, then the tax question has a rather simple answer: the laws of your country apply. If lottery winnings are free of tax in your country, you have nothing to worry about. If your law says you have to pay taxes, well then there is no way around paying them.
Two things can happen, depending on how your lottery authority handles things. Either the lottery authority deducts the taxes on those winnings right away and transfers the due tax to the government, or they pay you the full amount but they will also notify your tax authorities about your winning. In the second case, you will have to declare your winnings and pay the taxes yourself.
Now let’s talk about the situations you may find yourself in after buying your lottery ticket here at RedFoxLotto and you won a prize. As a matter of fact, playing foreign lotteries online has more advantages than the simple fact that you can go for bigger international jackpots!
In this scenario, you will get paid the amount that remains after taxes. For example, if you were to win the Powerball or Mega Millions jackpot as a foreigner, 30% of your winnings will be taken by the US tax authorities. If you think that this is too much, well residents of the US have to pay 25% in government taxes plus another 14,6% in federal taxes.
For these two lotteries, whether winnings are tax-free or not depends on where the tickets were bought. In the UK, Austria, Belgium, France, Ireland, and Luxembourg lottery winnings are not taxed. In Spain and Portugal, you will have a 20% deduction for taxes, and in Switzerland, it’s 35%.
The same 20% tax would be applied if you were to win a large amount in either El Gordo or La Primitiva of Spain.
That is the best that can happen to you. You get the full amount paid out, and all you have to worry about is what to do with the money and about the tax laws at home. But be sure to read the following as well.
Well, first of all, you have to check your local tax laws. If your government taxes lottery winnings, you will have to declare and pay them as soon as the money enters the country. But there is one thing you also need to know: does your country of residence have a “double taxation treaty” with the country of the lottery? If it does, that means that if you have already paid taxes on your lottery prize in the country where the lottery is held, you do not have to pay those taxes one more time at home.
There is one important thing to consider though: is the tax rate in your country higher than the tax rate of the country holding the lottery? Let’s say you won 10 million in the US, so the US taxman deduces 30%. If the tax in your country is 40%, you may have to pay the difference of 10% at home.
Please do not take this as valid legal advice, but think about this: If you win the jackpot in the US or any other large amount in any other country outside your country of residence, then you may want to travel to that country and pick up your check in person.
At this point, you could decide not to return to your home country right away. How about a well-deserved vacation in a nice and sunny place like, for example, the Cayman Islands? We are sure most financial institutes there will be happy to provide you with advice on what to do with that check…