Updated Tax Administration instructions on the lottery tax – some lotteries included
The Lottery Tax Act applies to both lotteries and other public lotteries and guesses, which are subject to chance and in accordance with the Lotteries Act (23.11.2001 / 1047), which depend on chance and in which you can win either money or a cash benefit. Organizers of licensed lotteries within the meaning of the Lotteries Act are generally aware that they are organizing taxable lotteries. In the case of non-licensed lotteries, the situation may be different, in particular for marketing campaigns in Some, as these may not be considered as lotteries.
The lottery tax is determined in lotteries under the Lotteries Act as follows:
- 12% of the lottery proceeds in exclusive lotteries. Lottery proceeds refer to the difference between the total stakes and the winnings paid to players.
- 1.5% of the total actual selling price of the lotteries and lotteries organized by the charitable organization in accordance with the Law on Lotteries.
- 1.5% of the proceeds from the operation of vending machines. The income from slot machines refers to the total amount of money made to operate the machines.
- 5% of the total value of winnings in a bingo game, excluding winnings qualifying for a new game.
The hallmark of lotteries other than those referred to in the Law on Lotteries, but taxable, is the dependence of the win in part or in full on chance. The lottery must be public, ie in principle anyone can participate in the lottery, and the number of participants is not limited in advance. Alternatively, the lottery may be targeted at a limited number of participants, as long as the number of participants is large enough – at least several hundred according to the instructions of the Tax Administration. Such could be, for example, a sufficiently large invited guest event.
Lotteries within the meaning of the Lotteries Tax Act may require some kind of pseudo-payment in order to make a profit, such as filling in a lottery ticket or a questionnaire or, more generally, ‘liking’, commenting on or distributing a publication in Finland. For example, campaigns run by companies for some marketing purposes, in which a prize is drawn among commenters or distributors of the announcement, are usually lotteries within the meaning of the Lottery Tax Act. However, the lottery does not necessarily have to be a company. An individual can also, for example, organize a taxable lottery through his blog. In this case, the blogger acts as the executor of the lottery and is responsible for the lottery tax.
A taxable lottery does not apply where the profit is consideration for work or work performed. Such could be, for example, competitions organized by the employer among employees, such as sales or customer acquisition competitions or initiative prizes. In this case, the prizes received for winning the competitions are usually the employee’s taxable wage income.
The amount of lottery tax in lotteries other than those referred to in the Lotteries Act is 30% of the total value of the winnings. The value of the prize generally refers to the price paid by the organizer of the lottery for the prize. If the profits have been received free of charge or the value of the profit cannot otherwise be determined, the value of the profit is its probable transfer price. This could be the case, for example, if a person draws product rewards they receive for free through their blog. No lottery tax is payable if it is less than € 50 per month. This means, in the case of lotteries other than those covered by the Lotteries Act, that no tax will be payable if the total value of the winnings is less than EUR 166.66 per month.
The lottery tax is the responsibility of the executor of the lottery and cannot be transferred to the winner of the lottery, for example. This means that the financial administration of companies should have sufficient knowledge of marketing activities so that the financial administration is able to identify lotteries subject to lottery tax and take care of the necessary notification and payment of tax to the Tax Administration. In particular, some campaigns are often quick, so it’s a good idea for companies to create clear rules of the game and internal guidelines to ensure adequate information flow.