The pursuit of betting on sporting events is an exhilarating pastime for many punters. However, all customers of betting providers naturally aspire to achieve maximum profits. After a prolonged lucky streak, the lingering concern arises as to whether the tax authorities may also take an interest in the accumulated winnings.

Fortunately, the tax authorities usually spring into action promptly whenever there is something to gain – yet, pleasingly, the profits derived from sports betting stand out as a rare exception here.

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While we must, of course, point out that due to the numerous pitfalls of tax law, it is not possible for us to provide a definitively legally binding answer at this point; the following explanations should still be useful for "everyday use." It is worth noting that we are unable to provide a completely conclusive and legally binding response here due to the complexities inherent in the tax legislation. However, the information shared below should serve as a helpful guide for general purposes.

If professional players are exclusively dependent on their sports betting winnings to make a living, it is advisable for them to potentially consult a tax advisor. This is because they find themselves in a legal gray area concerning taxation.

Winnings from gambling are generally exempt from taxation.

Casual tappers, on the other hand, need not fret about this matter at all; since the profits they make are not considered as the typical types of income stipulated in tax law (cf. § 2 para. 3 EStG), there will be no unpleasant surprises when filing their tax returns. Rest assured, they can go about their business without a care in the world.

Even if one consistently earns profits from sports betting, they can keep the entirety of their winnings to themselves: The tax office only comes into play when the accumulated wealth – for example, in a daily or fixed deposit account – generates further interest income. Such capital gains must then be taxed in the usual manner.

The reason why betting revenues are not subject to taxation, incidentally, can be attributed to a straightforward cause: if the authorities were to target successful sports bettors, this would simultaneously prompt all those bookmaker customers whose overall balance shows a deficit, according to current legislation. These individuals would then be able to claim their losses as tax deductions as well – for the government, this would result in a substantial loss of revenue.

Figure above:

The winnings displayed on the online betting slip on the Tipico bookmaker's homepage are not subject to taxation. Bet slips on the website of Tipico bookmaker do not require any tax payment on the winnings they show.

Pro tipsters find themselves caught between a rock and a hard place.

On the other hand, the situation seems to be a bit more problematic when a taxpayer derives their income primarily or even exclusively from the profits of their placed sports bets; such an individual, commonly referred to as a "professional gambler," is technically engaging in a business activity.

Such action would not only require an official registration with the trade office but also entail the obligation to pay taxes - those affected can at least hope to benefit from the ambiguous legal situation. Registering with the trade office becomes necessary when engaging in such activities, which in turn would result in the obligation to pay taxes - however, those affected can at least take advantage of the uncertain legal framework. By engaging in such behavior, not only is it necessary to officially register with the trade office, but it also incurs the obligation to pay taxes - however, those affected can at least have hope of capitalizing on the unclear laws. Engaging in such conduct mandates an official registration with the trade office, and additionally, it imposes the responsibility of tax payment - but affected individuals can at least anticipate benefiting from the ambiguous legal circumstances.

Top image: The bookmaker Sportingbet does not impose the obligatory 5% betting tax on combination bets in Canada. Any betting winnings are already tax-free for the bettor, as the tax must be paid by the betting company!

Finally, the tax law remains silent on what monthly turnover, for example, is required for an ordinary bettor to become a professional gambler; this apparent gap in legislation means that there is no "threshold of profitability" at which tax liability automatically arises.

We have yet to come across any case where a potentially eligible "pro" has actually been charged: However, given that Canadian tax authorities have already started questioning certain poker players in recent years, the current state of affairs does not provide definitive certainty. Nonetheless, it is important to note that no reports have surfaced regarding any "pros" being levied with taxes. It is therefore crucial to remain vigilant and stay updated on any potential changes in the future.

Switzerland is taking a unique approach

The legal situation in the land of the Swiss is much more clear-cut, even though the "Swiss model" may not necessarily work in favor of sports bettors. Unlike in Canada and Austria, all winnings from gambling must be taxed here. That being said, this does not necessarily deter enthusiasts from enjoying the thrill of placing bets and participating in games of chance. With a well-regulated and transparent framework, Switzerland ensures that the gambling industry operates in a fair and responsible manner.

Apart from the few lucky lottery millionaires, the successful customers of bookmakers are also required to pay their share by the local tax authority. It is not only the fortunate individuals who hit the jackpot but also those who have had favorable outcomes with bookmakers that face the obligation to contribute to the state's finances. Therefore, the tax administration ensures that both groups are held accountable for their winnings.

In Switzerland, those who earn an annual betting profit of over 1,000 Swiss francs are subject to taxation – this relatively restrictive regulation can be seen as a small concession to sports bettors. Until recently, the non-taxable exemption limit was set at a meager 50 francs: only since the beginning of 2013 have the traditional hobby bettors been given a break. This adjustment reflects a more lenient stance towards those who engage in casual wagering.

The Canadian betting tax directly affects the betting provider.

However, despite this general tax obligation, the notion that Switzerland makes life particularly difficult for betting customers cannot be sustained. This is because even if the Canadian equivalent leaves betting winnings untouched, the local tax authorities have been hitting bookmakers directly since 01.07.2012. Nonetheless, it must be acknowledged that the tax burden on customers is an inevitable consequence of the legal framework in place. Therefore, it is important for individuals to stay informed and understand their obligations when engaging in betting activities. Rest assured that our website aims to provide comprehensive information and guidance to help users navigate the intricacies of the Swiss betting landscape.

Many bookmakers directly pass on the 5% gambling tax, which has been legally imposed since then, to their customers - thus, even those bettors whose annual winnings would still be classified as tax-free in Switzerland are sometimes charged. Numerous betting providers apply the legally established 5% wagering tax directly to their clientele, thereby collecting funds even from those punters whose yearly profits would still be considered exempt from taxation in Switzerland.

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All the frequently asked questions from this topic group.

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