Taxes on Lottery Winnings: Do You Have to Pay in Germany?
The dream of the big jackpot has come true – the money is in your account. But then comes the fear of the tax office. Does the state want its share? In Germany, the answer is happily simple: Generally no. But as always, the devil is in the details.
Key Takeaways
- Lottery winnings are tax-free in Germany (no income tax).
- Earnings from the winnings (e.g., interest) must be taxed.
- Social welfare recipients must declare the winnings as assets.
- Gifting winnings triggers gift tax.
Why Lottery Winnings Are Tax-Free
In Germany, the rule is: lottery winnings do not fall under any of the seven types of income in the Income Tax Act (§ 2 Para. 3 EStG). Since the lottery is considered a game of chance, the prize is not compensation for a service. You haven't 'worked' for it in the fiscal sense.
Whether you win €5 or the Eurojackpot of €120 million: The state takes not a cent of it. The money lands in your account gross for net.
Legal Basis
Lottery is a gambling contract (§ 762 BGB). Winnings from it are not taxable because they are based on chance and do not represent a permanent source of income.
The Exception: Interest & Earnings
Once the money is in your account, a new calculation begins. If you invest the winnings and earn interest, dividends, or rental income from it, these earnings are taxable.
Example: Savings Account
You win 1 million Euro and invest it at 3% interest.
- Winnings€1.000.000
- Interest (Year 1)+ €30.000
- Capital Gains Tax (25%)- €7.500
- Net Interest€22.500
*plus solidarity surcharge & church tax if applicable
The tax office is only interested in what the money 'earns', not the money itself.
Caution When Gifting (Gift Tax)
Many winners want to share their luck. But beware: If you simply transfer money to your parents, siblings, or friends, gift tax may apply. The exemptions are exceeded quickly.
| Relationship | Exemption (every 10 years) | Tax Rate (from) |
|---|---|---|
| Ehepartner | €500.000 | 7 % |
| Kinder | €400.000 | 7 % |
| Enkel | €200.000 | 7 % |
| Eltern, Geschwister, Freunde | €20.000 | 30 % |
If you form a (written) syndicate before the draw, the winnings belong to everyone together. Then the distribution is not a gift, but the payout of the respective share. But this must be provable!
Lottery Winnings and Social Welfare
Anyone receiving Bürgergeld (formerly Hartz IV) must report a lottery win immediately. The win is considered 'one-time income'. The job center will stop payments until the win is calculated to be used up (divided over 6 months).
After that, the remaining amount counts as assets. If this is above the protected assets (currently €40,000 in the first year, otherwise €15,000 per person), there is still no citizen's benefit.
Germany in Comparison
Tax-Free
Deutschland, UK, Frankreich, Kanada, Australien
Partial Tax (~20%)
Spanien, Portugal, Italien (Lottosteuer wird direkt abgezogen)
Full Taxation
USA (bis zu 37% Bundessteuer + Staatssteuer)
Check Your Winning Chances Now
Now you know you can keep the winnings. But do you have the right numbers? Check them against historical draws now.
Check NumbersLegal Disclaimer: This article does not constitute tax advice. Laws can change. For large winnings, we urgently recommend consulting a tax advisor.