Are EuroMillions Prizes Taxable?
26th August 2016 10:37 AM
EuroMillions returns tonight with a jackpot worth £20 million (€24 million), following a rollover on Tuesday evening. In addition, it is Mega Friday for UK players, meaning there are five prizes of £1 million and a five-star holiday to Brazil to be won in the special Millionaire Maker draw. With such large sums on offer, players across Europe will already be dreaming of how they will spend the cash, but how much, if any, will have to be sacrificed to tax if they win?
Which EuroMillions Countries Tax Winnings?
Only three of the nine participating EuroMillions nations demand big winners pay taxes on their prize. As shown on the Playing Abroad page, amounts above €5,000 in Portugal are subject to a 20 percent levy, with Swiss players paying 35 percent on prizes above CHF1,000 and Spanish ticket holders incurring a tax of 20 percent on sums greater than €2,500.
The remaining six countries do not class lottery winnings as earnings and players will find the full sum landing into their bank account. However, there are a number of other ways that a large lottery win can affect your tax bill.
Inheritance Tax on Lottery Winners
In the UK, any win that takes the value of your estate above £325,000 for individuals or £650,000 for couples incurs inheritance tax of up to 40 percent on everything above that threshold, or 36 percent if at least ten percent of the total is donated to charity. You should also note that money gifted to others is still counted as part of your estate and the recipients would have to pay tax on the amount if you were to die within seven years of making the generous gesture. However, it is possible for them to take out life insurance, which would cover the payout if the worst were to happen.
If you play as part of a lottery syndicate, it is important to have an agreement in place before you buy tickets, otherwise you may be liable for inheritance tax on the full amount if the syndicate manager who distributed the funds were to pass away within seven years. Euro-Millions.com provides a sample syndicate agreement on which you can base yours, ensuring you don’t receive an unecessary tax bill whilst also helping to keep relations within the group harmonious.
There are a number of allowances you can take advantage of to lessen the impact of inheritance tax from your EuroMillions prize, and the UK National Lottery provides financial advice to all of its big winners to help them with such concerns.
Tax on Interest
Even if your country doesn’t tax lottery winnings, you are likely to still have to pay a levy on the interest that accrues on the lump sum in your bank account. It is recommended to UK winners by the National Lottery that they open a special account at a private bank, where employees are used to dealing with the financial affairs of wealthy clients.
The above information is for guidance only and winners from the UK or any of the other eight participating countries should seek out personal, tailored advice in the event of a large EuroMillions windfall. Your next chance to get your hands on an oversized cheque bearing a dizzying number of zeroes is tonight, and you can buy EuroMillions tickets online or from authorised retailers across the participating nations.
Page Last Updated: 26/08/2016 10:37:22