Spanish tax agency tightens scrutiny on online gambling winnings

The Agencia Tributaria (AEAT), Spain's Tax Agency, under the leadership of Director General Soledad Fernández, is ramping up its oversight of profits from various sources, including online gambling.

According to a new directive from the agency, Spanish consumers are mandated to declare profits from online gambling winnings in their 2023 self-assessment income tax returns, as per media reports.

Ahead of the 2023 income tax filing period, AEAT has issued approximately 2.9 million notices to taxpayers, urging them to declare profits from activities such as online gambling, cryptocurrency transactions, property rentals, and foreign income. Notably, this marks the first time notices have been issued specifically for online gambling profits, with 164,000 warnings sent out.

Additionally, in 2022 AEAT updated Tax Module-190 to ensure reporting of gambling prizes/winnings under €300, impacting 2023 tax filings.

Spanish taxpayers who earn more than €22,000 per year must now report gambling winnings of €300 or more, a significant reduction from the previous €1000 disclosure threshold.

AEAT enforces a five-tiered tax framework for sports betting and online gambling winnings, ranging from 19% to 45%, depending on the amount won. The tax is set at 19% on winnings up to €12,450, 24% from €12,450 to €20,200, 30% on €20,200 to €35,200, 37% on €35,200 to €60,000, and 45% for winnings over €60,000.

AEAT's efforts aim to streamline the process for amending or submitting specific declarations on gambling, cryptocurrency, and foreign income transactions, providing taxpayers with the means to modify amounts in their filings efficiently.

While these changes represent tighter regulations on online gambling, they have faced criticism from Spain's conservative party, the Partido Popular (PP), who view the modifications as an unnecessary and punitive tax on recreational consumers.