Taxes on Crypto Gambling Wins
Some of the best Ethereum gambling sites will give you a great, easy way to make some money and have a fun time doing it — but they won’t help you figure out how much money you might owe to the taxman from those winnings.
That’s right. You might think that winning money on crypto gambling sites is all fun and games — until the tax bill comes due. Then what do you do? How much would you owe? Do you even owe anything or are you worrying for nothing?
Let’s examine some tax laws in various countries to see what you should prepare your gambling winnings for.
Several tax havens exist around the world. If you’re already a resident of one of them then you probably don’t have much to worry about.
However, if you live in a country that taxes Bitcoin with heavy capital gains (like the U.S.) then maybe you’d want to move to an international country — especially if your gambling winnings could potentially be big.
Here’s one example of an international spot that’s self-contained and a good deal for crypto gamblers with big winning potential.
“If digital assets are bought for long-term investment purposes, any profits from disposal would not be chargeable to profits tax,” wrote Henri Arslanian, a global crypto leader at PwC in March 2020. But he added that “this doesn’t apply to corporations—their Hong-Kong sourced profits from cryptocurrency business activities are taxable.”
So if you’re not running a business, if you’re just a regular crypto gambler, then you should be fine.
If the EU is more your thing, then you might want to consider one of the most progressive and Bitcoin/blockchain-friendly little countries in Europe — the island of Malta, which recognizes Bitcoin “as a unit of account, medium of exchange, or a store of value.”
“Malta doesn’t apply capital gains tax to long-held digital currencies like Bitcoin, but crypto trades are considered similar to day trading in stocks or shares, and attract business income tax at the rate of 35%. However, this can be mitigated to between five percent and zero, through “structuring options” available under the Maltese system.”
So as long as you don’t go day-trading your winnings — just hold them or use them for more Ethereum based betting — then you won’t need to worry about them diminishing due to taxes.
If you’re really into Europe — then your best option is Portgual. It’s sunny, it’s friendly, and it has some of the best tax laws regarding crypto in the whole world.
“Proceeds from the sale of cryptocurrencies by individuals have been tax-exempt since 2018, and cryptocurrency trading is not considered investment income (which is normally subject to a 28% tax rate.) “
The one place you might not want to sit and play Ethereum betting sites for big money — is Poland. They impose a 19% capital gains tax and another 4% tax if your income exceeds one million PLN (the local currency).
The bigger countries like the USA and the UK are taking cryptocurrencies a bit more seriously.
Like China — which has banned cryptocurrencies outright (and then made them legal) off and on for years — India is also thinking of banning them. This drew a lot of anger from many people, both those who invest in cryptocurrencies and those who simply want financial freedom.
“Suggesting that a blanket ban on cryptocurrency may not be on the cards, Finance Minister Nirmala Sitharaman said that the government is holding talks with the Reserve Bank of India and will take a very calibrated position on the matter. “
Fortunately, as that article pointed out, all the negative press has the officials of India reconsidering their position.
So if you’re an Ethereum better in India, keep those fingers crossed — you might be able to gamble legally with crypto in India soon.
If you visit Ethereum betting sites from the US, then you are in one of the more restrictive cryptocurrency-regulated countries. The tax authority in the US treats crypto with capital gains taxes of 19% or more.
Perhaps you can be taxed differently if you declare your winnings as gambling profit — however, if you withdraw $10,000 of BTC, for example, and it’s worth $10,000 at the time of withdrawal but then increases and is worth $25,000 when you cash out into USD — then perhaps you’d face a capital gain on the extra $15k you made between holding the winnings and cashing them into fiat.
It’s best to talk to a qualified accountant who is current on crypto law before you take any steps in the US.
At the end of the day, as you can see — you will need to dive into more details and research to find out how much of your Ethereum betting winnings are taxable — and how to pay them.
Perhaps one day governments around the world will all come to common agreements about what Bitcoin is, how to tax it, and similar positions. You may even be able to pay your taxes in crypto someday.
Until that time, do some research, contact a professional, and don’t stress too much!