Poland – will a 10% tax on winnings in casinos lead to their eradication?

Due to the fact that the amended tax was in force and the payment of these new fees had to be made as soon as January 2018, the Editors raised a question to the casinos operating in Poland regarding the situation of the gaming centers managed by these companies.

We wanted the answers to show real difficulties and another harassment that the current government has directed to this private sector of the gambling industry. The current regulations in force since January 1’st, 2018 are:

“Exempt from income tax are:

1. winnings in gambling games, if the one-time value of these winnings does not exceed PLN 2280, organized and operated by an authorized entity under the provisions on gambling in force of European Union Member or other European Economic Area; ”

Winnings that exceed the above are subject to 10% flat-rate income tax of total amount (Article 30 (1) (2) of the PIT Act). A single value of winnings in gambling games is considered in the case of winnings of casino games or arcade game machines – the amount obtained is the difference between the sum of paid rates and the sum of paid games during a single stay in a casino games or arcade games room. “

From the companies we asked we received comments, which after compiling the answers we publish here:

(…) Introduced from January 1’st this year the abolition from the Act on income tax for natural persons existing from the beggining (since 1992) of the tax exemption won in gaming casinos is cumbersome for entities operating casinos for several reasons.

Firstly, the construction of the definition set out in art. 21 par. 6a of the PIT Act is incorrect (for the single value of winnings in gambling games referred to in paragraph 1 point 6a, it is considered in the case of casino games won or a slot machine gaming salon – the amount obtained is the difference between the sum of paid rates and the sum of paid winnings during one-time casino games or arcade games room). The positive value of the amount constituting the difference between the sum of paid rates and the sum of paid wins during a single stay in a casino game is a loss for the player – the loss always occurs when the value of the sums paid is greater than the value of the sum of wins paid.

Secondly, the casino operator is bounded to fulfill the obligation of the payer referred to in art. 41 par. 4 of the PIT Act (calculation, collection and discharge of the tax on winnings to the tax office) despite the fact, that when the winnings are withdrawn (withdrawal of the amount from the exchange of chips for cash) it is possible for the client to continue playing, which may also change the amount of his winnings as well as the tax base. This is another legislative flaw, this time consisting in inconsistency ofthe definition of a single win with the provision on tax collection.

In connection with the above, the casino operator must (not to expose himself to fiscal and tax penal liability – for a tax not collected) determine the tax base in the reverse order specified in the tax act, and ask for each payout whether the payment is already the last (and customers do not always give true answers).

In addition, there is a huge organizational effort, which had to be made to determine on a regular basis for each client’s current balance of payments and withdrawals (…)

As can be seen from the above commentary, the prevailing chaos and change of tax law during the licensed period of business creates difficulties and troubles, especially for companies that have to add new harassment to the existing fiscal charges. It is associated with great organizational difficulties in running casinos and the need to inform players (including foreign players) about the only obligation in the world to collect tax during the game.

Let us hope that this legislative error will be repaired soon, unless the goal of the legislator is not excessive casino fiscalism but leading to eliminate them from the market.

Time will tell.

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