Polish Supreme Court Rules On Lottery Winnings Tax

January 5, 2022
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Paying a tax on lottery winnings in Poland will depend on employment status, following a ruling from the country’s top court.

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Paying a tax on lottery winnings in Poland will depend on employment status, following a ruling from the country’s top court.

Poland’s Supreme Administrative Court (NSA) has settled a debate over the country’s 10 percent winnings tax on competitions and lotteries, deciding that if someone who is not self-employed wins a competition or a lottery, the tax due on their winnings is to be paid by the event’s organiser.

However, if a sole trader wins a competition or a lottery, the prize should be treated as revenue from business activities and they are liable for the tax themselves, the NSA said.

The ruling was issued in relation to a case involving a Poland-based confectionery producer, identified only as L Ltd. The manufacturer organises competitions and lotteries for customers and business partners, featuring both cash and material prizes.

L Ltd said it finances competitions organised by external agencies, lotteries organised by specialised lottery operators and competitions organised by other entities in which the company only sponsors prizes. The business had taken the view that, in every case, taxes on winnings should be collected and paid by the operator.

This interpretation, however, was not fully shared by tax collectors the National Revenue Administration (KAS), which told L Ltd that when it hires external agencies and prizes are awarded to those who are not self-employed, that firm should pay the tax itself.

In the first instance, the Regional Administrative Court in Warsaw agreed with L Ltd and ruled that, if prizes are paid out by external agencies, they are required to collect and pay the taxes for all kinds of winners.

But this 2018 ruling has now been amended by the NSA’s late 2021 decision. The top administrative court partially agreed with the regional court’s decision, but rejected its view on the self-employed.

If such a person wins a competition, their winnings constitute revenue from business activities and they must pay the tax themselves, the NSA said.

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