Tax risks for organizers of international lotteries with Austrian participants

On January 1st, 2011, Austria introduced a gambling levy. The organizers of any lottery or similar event which addresses “the domestic public” now need to pay 5% of the total prize value to the state. This also applies to prize competitions and contests as they are, for instance, often organized by retail chains and similar companies.

The Austrian Supreme Administrative Court recently had to rule on whether in the case of international contests without participation fees the levy needs to be calculated as a percentage of the total prize value for all countries involved or merely as a percentage of the total prize value attributable to the Austrian public (VwGH 24.1.2017, Ro 2015/16/0038, Ro 2015/16/0039 und Ro 2015/16/0035).

After referring the question to the Austrian Constitutional Court, the Supreme Administrative Court has now decided on the interpretation of the relevant clause of the Austrian Gambling Act, § 58 Abs. 3 GSpG. According to the court the assessment basis for the 5% levy is the total prize value of the international contest.

Consequently, organizers of such international public contests should be careful not to include Austrian participants in their contests anymore lest they run a significant tax risk. If, for example, a supermarket chain holds a contest in Germany in which Austrian customers are allowed to participate, the total value of the prizes offered constitutes the assessment basis for the Austrian gambling levy.