Can You Claim Back Gambling Tax From Other Countries?

tax refund buttonIn the United Kingdom, people who win money via gambling don’t have to pay tax on their winnings. That doesn’t mean that tax isn’t paid, but rather that the tax is paid by the betting operators rather than the people doing the bettors. The same isn’t true of all countries, however, with the United States of America being a good example of a country that does ask for tax on gambling winnings.

If the UK has a tax arrangement with the country in question then you can claim back the tax that you’ve paid. With Las Vegas being a particularly popular resort for British guests to head to, it’s no surprise that Brits are keen to understand how the tax is reclaimed and if there are any rules and regulations in place on doing so. This typically involves filling out paperwork and reporting the information to HMRC.

Reciprocal Arrangements

reciprocal arrangements international agreementsHer Majesty’s Revenue & Customs have tax treaties with a wealth of countries all around the world. From Albania to Hungary, India to Kenya, there’s barely a nation on earth that HMRC doesn’t have some sort of agreement or arrangement with. Not all of them include gambling, of course, but the very fact that there are treaties in place means that there will be laws and regulations to abide by, depending on where you win your money.

What happens when it comes to gambling winnings is not to be confused with so-called Double Tax Treaties. This is when someone is resident in two countries and wants to avoid paying tax in both of them. That’s entirely different from someone who has won money by gambling in a country that is not the United Kingdom and therefore wants to reclaim the tax that’s been paid on it. The latter is obviously what we’re looking at here.

How It Works

double taxationThe Double Tax Treaty is worth mentioning, though, because it’s what ensures that British residents don’t have to pay tax on money won in a country that we have an agreement with. Let’s look at the United States of America as the perfect example. Article 22 of our agreement with the US states the following:

“Items of income beneficially owned by a resident of a contracting state, wherever arising, not dealt with in the foregoing articles of this convention (other than income paid out of trusts or the estates of deceased persons in the course of administration) shall be taxable only in that state.”

This essentially means that the tax is a matter between the resident of the United Kingdom and the United States’ Inland Revenue Service. In America, the IRS adds a 30% Withholding Tax on gambling winnings automatically. This means that residents of other countries, where tax is not paid on gambling winnings, must apply to the IRS to get the funds released.

Form 1040NR, U.S. Nonresident Alien Income Tax Return, is the one that you’ll need to ensure that you’ve filled in if you later wish to reclaim money paid in tax in the United States. You’ll also be required to fill in a 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. This will then allow you reclaim some, if not all, of the 30% tax paid on your winnings.

It’s Complicated

Tax Letter HMRCIn America, companies exist for the sole purpose of reclaiming money lost in tax. They can charge a fee of as much as 50% of the lost amount, but they take away the stress of ensuring that you’ve filled in the correct paperwork and given the correct information. There are, of course, different rules in different countries and certainly different forms that you’ll need to fill in.

It is far from being a one-size fits all situation, so you’ll need to make sure that you find out exactly what the rules and regulations are before you head to a foreign country and start gambling. The likes of Spain, France and the Netherlands all have tax rules of their own when it comes to gambling, so you’ll need to make sure that you know that they are if you’re betting there.

The treaties mentioned elsewhere in this piece are important because their very existence means that residents of the United Kingdom almost never have to worry about paying tax on their winnings when they gamble abroad. Yes, tax is paid on money spent gambling, but as it’s not paid by the players it’s not something that you’ll need to worry about.

This is the case whether the person doing the gambling is an amateur or considers themselves to be a professional, so if you’ve spent an age practicing your poker face then you don’t need to worry about entering tournaments. You can win in Las Vegas or Macau and your winnings will be yours alone to spend how you wish, even if you need to jump through hoops to claim it all.

Where To Gamble

At the time of writing, there are fifteen countries other than the United Kingdom that do not tax people on their gambling winnings. They are as follows:

  • Austria
  • Australia
  • Belgium
  • Bulgaria
  • Canada
  • Czech Republic
  • Denmark
  • Finland
  • Germany
  • Hungary
  • Italy
  • Luxembourg
  • Malta
  • Romania
  • Sweden

plane flyingObviously the level of gambling that you can get involved with will differ from country to country, so just because they don’t charge tax on winnings doesn’t mean that you should be flying straight there. It goes without saying that Las Vegas is a gambling Mecca, so even with the fiddliness of claiming back your winnings, it might be a better place to gamble in than Finland, say.

You’ll need to weigh up for yourself what you want to get out of your gambling experience, but all of the countries on the list above are good ones to head to in terms of knowing that you won’t need to worry about filling in forms or reclaiming any winnings at a later date. That being said, you might gamble with such low stakes that it’s unlikely to matter all that much.