Germany's poker taxation: Is poker more about luck or strategic skill?
Poker, a game that straddles the line between luck and skill, has long been a subject of debate when it comes to taxation. In Germany and the UK, the tax treatment of poker winnings varies significantly, depending on whether a player is a professional or a casual gambler.
In Germany, the Federal Tax Court (Bundesfinanzhof) classifies professional online poker playing as a taxable business. If a player dedicates many hours weekly, employs structured strategies, and shows a consistent approach, their poker activity is considered commercial. This means that income and commercial taxes apply, with tax rates reaching up to 90% on income for professionals. Casual or occasional gambling winnings, however, are generally not taxed, provided gambling is not the main source of income.
On the other hand, in the UK, poker winnings are generally not subject to income tax, regardless of whether the player is a professional or an amateur. The UK tax system does not treat gambling or poker winnings as taxable income for individuals. Many other European countries, including Austria, Italy, and Sweden, also follow this model.
The distinction between a "market-oriented," taxable behavior and a non-taxable activity in Germany is made on a case-by-case basis. The Federal Fiscal Court makes the taxation of poker winnings dependent on whether the player becomes a businessman through their activity. The repeated successes of players like Eddy Scharf played a significant role in the court's decision to tax poker winnings.
In the US, gambling winnings are taxable with complex rules, and starting 2026, a new law will limit the deduction of gambling losses to 90% of winnings, potentially increasing taxable income for professional gamblers. At major tournaments like the World Series of Poker (WSOP), US-based players face significant tax withholding on winnings, affecting the net amount received.
For professional poker players, this tax landscape presents opportunities and challenges. Some may choose to relocate to countries like the UK, which offers a more favourable tax environment, to avoid high taxes in their home country. However, understanding the tax implications of one's poker activity is crucial, as the question of whether taxes should be levied on poker winnings hinges on the question of whether poker is a game of luck or a game of skill, a question whose answer varies widely across different countries and regions.
| Country | Casual Poker Winnings Tax | Professional Poker Winnings Tax | |----------|---------------------------|--------------------------------| | Germany | No tax (unless main source of income) | Taxed as business income (up to 90%) | | UK | No tax | No tax | | US | Taxed immediately | Taxed, with deductions limited starting 2026 |
What about the taxation of sports winnings compared to poker winnings? Is it similar, or does it differ significantly?
In most countries, sports betting winnings are typically considered income and are therefore taxed. However, the tax treatment can vary significantly, with some countries providing allowances for gambling losses or offering more favorable tax rates for sports enthusiasts who consistently win.
