Spain’s Ministry of Finance has found a deficiency that allowed prizes of up to 300 euros from gambling activities to remain out of the tax authorities’ eyes. Therefore, it now promoted a project to modify model 190, which refers to the declaration of the annual summary of withholdings and payments on account of Personal Income Tax regarding income from work and economic activities, prizes, and certain capital gains.
After the change, which will affect the returns made in 2023 for the year 2022, the lower prizes will also have to be included, in order to check if there is a capital gain.
According to Arturo Jiménez, director of the Research Office of the Spanish Association of Tax Advisors (AEDAF), it is necessary to start from the premise that there are two main types of prizes. On the one hand, there are the “official ones, so to speak, which include lotteries, Red Cross or ONCE draws.” These, as a general rule, have a minimum exemption of 40,000 euros from which taxes must be paid.
On the other hand, there are games of chance and bets. All of them are also subject to withholding, “with the only exception of those that do not reach 300 euros.”
This gap, Jiménez added, causes these gains to go completely unnoticed since they should not be declared in the other form, the 347, in which they could be included.
The reason, he further explains, is that the latter is the document that must be submitted by the paying entities, where all prizes exceeding 3,005.06 euros are included.
The Treasury is aware that these two circumstances cause prizes of less than 300 euros to not to be recorded “in any informative declaration”, neither in model 190 nor in the 347. Also, according to the document submitted to public information, “they are not subject to withholding or payment on account”.
Thus, in order to avoid this loss of information and to be able to correctly inform the taxpayer of the receipt of this capital gain in the tax data necessary for the preparation of his income tax return, “it is considered necessary to modify the order regulating model 190, so that such prizes have a place within the different payment subkeys”, the text states.
According to Rubén Gimeno, director of the studies service of the Register of Tax Advisor (REAF) of the General Council of Economists, the change of criteria of the Treasury is partly due to the boom that online gambling is experiencing in Spain, and to the extra efforts of the Tax Agency when investigating and detecting who had obtained these prizes. “With this amendment, the Treasury is spared the inspections,” he adds.
In fact, in the explanatory memorandum, the department headed by María Jesús Montero details that the change will make it possible to correctly report whether “the receipt of such prizes implies for the taxpayer the obligation to declare the tax, thus avoiding subsequent discrepancies and administrative verification actions.” According to the two experts, something similar has been happening for months with the sector of cryptocurrencies and other digital assets, which has led to several moves by the Treasury to strengthen its control.