International edition
October 19, 2021

It grants a tax exemption only to domestic entities

Spanish lottery tax discriminates other EU organizers

(Spain).- The European Court of Justice (ECJ) found that Tax exemption restricted to winnings from lotteries and games of chance organised by state national bodies and entities in Spain, unduly discriminates against other EU organizers of lotteries offered to Spanish residents.


panish taxation of lottery winnings violates EU guarantees on the freedom to provide services because Spain grants a tax exemption to earnings from lotteries and games organized by domestic entities pursuing charitable activities but not to lottery earnings from similar entities in other EU member states.

Under Spanish legislation, winnings from lotteries and betting organized by Loterías y Apuestas del Estado (Spanish State Lotteries and Betting) or by bodies or entities of the Comunidades Autónomas (Autonomous Communities), as well as winnings from lotteries organized by the Spanish Red Cross or the Organización Nacional de Ciegos Españoles (Spanish National Association for the Blind) are exempt from income tax.

However, income from lotteries, games, or betting organized by other national bodies or by foreign bodies, including those established in other EU member states, is fully taxable. The Spanish government argued that the exemptions are based on the type of institution that organizes the lottery generating the income and not on the nature of the income itself and that the exemptions are justified on the grounds of consumer protection and social policy.

The ECJ found that the legislation is discriminatory to the extent that the exemption does not apply to other EU institutions of a nature similar to the Spanish institutions for which income from lotteries, gambling, and betting is exempted (that is, public bodies and entities pursuing social or charitable nonprofit activities).

The ECJ therefore dismissed the part of the commission's action concerning lottery organizers established in other member states that do not pursue social or charitable activities.

European Court Judgement further found that the Spanish tax exemptions cannot be justified on the grounds of protecting the social order, because they encourage participation in lotteries and gambling; nor can they be justified on the grounds of preventing money laundering and combating tax evasion.

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