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The Tax Situation for Scandinavians

by Ola Brandborn |  Published: Aug 01, 2006

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The top three in the Swedish Championships (from the left):

Joakim From, Magnus Holm, and Krister Hansson

Since my last column, I have received a few questions about the fuzziness of the tax laws when it comes to poker, so let's take a shot at making things a little bit clearer – at least for Denmark and Sweden, but it should have some significance even in Finland. We'll leave Norwegian tax for another column, since Norway is not a member of the EU and has a completely different set of laws.



The rules may seem simple: Poker is considered to be a lottery, and thus the winnings gained from poker – either live or on the Internet – should not be taxable as long as the game is arranged in a country belonging to the EU. If you win a lot of money, you won't have to pay taxes. If you win a poker tournament outside of the EU, you will be obliged to pay taxes as capital income, with a tax rate of 30 percent. You cannot make tax deductions for expenses such as the buy-in, and probably not for airline and hotel expenses, either.



So, what does this all mean, then? It means that, for instance, if you win a tournament in Great Britain, there is no tax to pay. If, on the other hand, you play the EPT Grand Final in Monte Carlo, you are obliged to pay taxes on your profits in the tournament, since Monaco is not a member of the EU even though it does use the Euro as currency. The tax department could surely come to the conclusion that the EPT is the organizer, and not the casinos in Monte Carlo, but then the question about taxation of the WPT in Paris would have to be reopened, so don't bank on that.



Then, there are the gray areas. First of all, the channel islands like the Isle of Man, amongst others, are probably not tax-free (so to speak), because the EU's rules about free movement of capital are not applied to their full extent there.



That makes them not fully adequate members of the EU, and thus we don't gain the benefits of all tax laws under the EU by playing there. Gibraltar, on the other hand, is a part of the EU where the rules apply to the full extent, and is therefore tax-free for Scandinavians.



Conclusion: If you qualify for the World Series of Poker through PartyPoker.com (Gibraltar), the satellite to the WSOP is free of tax, but if you qualify for the same tournament through PokerStars.com, you may be taxed 30 percent of the buy-in of $10,000.



What about a place in the money in the WSOP? Yes, the tournament is played in the U.S., and the rules are clear as crystal here: You are obliged to report and pay tax on all winnings. Since it's that time of the year, make sure you have your back covered in regard to taxes. If you exchange percentages with another player or get staked, be sure to make a written agreement! The tax department will demand tax from the winner, so protect yourself by making sure that you deduct money for tax before you divide your percentages.



And now, the bureaucracy starts: To make sure that the U.S. won't automatically keep a part of the money in taxes, you as a player from a country with a double-taxation treaty have to get an Individual Taxpayer Identification Number (ITIN). The easiest way to do this is to download a form named W-7 on www.irs.gov, fill it in, return it to the IRS, and wait 60 days. Or, perhaps it's just simpler to win first place and then take care of the necessary paperwork. Through irs.gov, there is also a list of "handling agents" for form W-7; right now there are three of them in Las Vegas that you can possibly bribe if you should be so lucky as to win a big tournament in the U.S.



Let's Cruise

Pokercruise.eu is at this moment starting up a regular cruise in the Baltic Sea. There is a bigger event with about 200-300 participants approximately once a month, and, of course, there are opportunities for big and small side games in the form of cash games and smaller tournaments.



Finally, I would like to congratulate Magnus Holm on winning the Swedish Championships. What serves better as a celebration of the Swedish national day, June 6, than to beat 299 other players in no-limit hold'em over a course of four days and to get approximately one million SEK richer? On the question of what he was going to do with the money, Magnus answered: "Probably spend it on gambling!" And thus spoke a true gambler. Congratulations, Magnus.



Ola Brandborn is a blogger and writer for poker.se

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