Every December 22nd, the Extraordinary Christmas Lottery transforms the Royal Theater of Madrid And half the country is glued to the radio, TV, or mobile phone. Behind every lottery ticket lies a mixture of hope, superstition, and that inevitable thought: if I win, how much money will it really be for me?
When the children of San Ildefonso sing out an important prize, the euphoria is usually followed by a very specific doubt: what part of the prize goes to the tax authorities and what part ends up in the winner's accountAlthough the general feeling is that the tax authorities "take a lot," the mechanics are quite clear and, if known in advance, help avoid surprises and plan better. what to do with the money.
The basic rule: 40.000 euros exempt and 20% on the rest
For several years now, all official raffles organized by State Lotteries and Betting, ONCE and the regional lotteries They are governed by the same tax law: The first 40.000 euros of each prize are tax-free.Only the portion exceeding that figure supports a fixed tax of 20%.
This means that If the prize is equal to or less than 40.000 euros, it is paid in full.without withholding tax and without needing to declare it as income for personal income tax purposes. However, if the amount exceeds that threshold, the amount exceeding 40.000 euros is calculated, and the 20% withheld by the Tax Agency is applied to that excess.
This rule was consolidated after the tax reform that began in 2013, when Lottery prizes are no longer completely exemptAt that time, the minimum taxable amount was barely 2.500 euros; over the years it increased until it reached 40.000 euros valid since 2020, a figure that remains the same for the 2025 Christmas Lottery.
Furthermore, it is worth noting that this The special 20% tax operates independently of the general personal income tax.It is not added to the usual income tax rates, it is not tiered and it does not depend on the taxpayer's income level: it is a fixed and automatic tax on the part of the prize that exceeds 40.000 euros.
How and when is the Christmas Lottery tax paid?
In practice, the winner does not have to do any additional paperwork to settle this tax. The withholding tax is applied at the same time as collecting the winning lottery ticket.either at a lottery office (for small amounts) or, in the case of prizes from 2.000 euros, at collaborating banks such as BBVA or CaixaBank.
That is to say, The lucky winner never gets to hold the "gross" prize in their hands.The paying entity automatically calculates what portion of the prize exceeds €40.000 and deducts the corresponding 20%. The winner is paid the net amount directly, that is, what remains after the tax authorities have taken their share.
For this reason, The prize does not have to be included in the income tax return afterwards. It is not considered employment income or capital gains. The tax has already been paid at source through withholding, and the Tax Agency receives the information directly from the Lottery and the banks that make the payment.
That does not mean, however, that the prize money will be off the tax radar forever. Any returns generated by that capital will have to be declared. in subsequent periods. Interest on accounts, deposits, Investment fundsDividends from shares or rents from the purchase of a home with that money will be taxed as savings income or capital returns, as appropriate.
Numerical examples: what the winner gets and what the tax authorities get
To better understand how the taxation of the Christmas Lottery works, it is helpful to review the amounts of the grand prizes in the draw and see what amounts ultimately remain in the pockets of the winners once the withholding tax has been applied.
The absolute protagonist is The Fat Christmas, endowed with 400.000 euros per tenthOf that amount, the first 40.000 euros are exempt, so Only the remaining portion, i.e., 360.000 euros, is taxed at 20%.The calculation is simple: 20% of 360.000 euros is 72.000 Euroswhich is what the tax authorities keep. The winner, therefore, takes home 328.000 euros net for each tenth awarded the first prize.
El second prize the draw distributes 125.000 euros per tenthAgain, the first 40.000 are tax-free, and the remaining 85.000 are taxed at 20%. The withholding tax in this case amounts to 17.000 EurosTherefore, the lucky winner receives 108.000 euros net.
In the case of third prize, worth 50.000 euros per ticket, only those earning 10.000 euros are taxed: that bracket is subject to a 20% tax rate, that is, 2.000 euros withholdingThe winner enters 48.000 euros net, while the other 2.000 go directly to the public coffers.
From the fourth prize downwards, Things change completelyThe two fourth prizes are distributed 20.000 euros per tenth and the eight fifth prizes, 6.000 euros per tenthSince none of them exceeds the 40.000 euro threshold, They are collected in full, without any tax withholding.The same applies to consolation prizes, approximations, hundreds, endings, and refunds: the amount of these prizes is less than the tax-exempt limit and, therefore, The tax authorities don't deduct anything..
That's why many players, even if they don't win the jackpot, would welcome any prize. “pinching” in the form of a fourth, fifth prize or consolation prizebecause the amount that arrives in your account exactly matches the amount shown on the official prize lists.
Comparison with the El Niño Lottery and other official lotteries
It is often heard that the Christmas Lottery "pays more taxes" than the El Niño Lottery, but the reality is different. The tax regulations are the same in both cases€40.000 exempt and a 20% tax on the excess. What changes is the awards structure and the amount of the first prize in each draw.
In El Niño, the first prize is awarded 200.000 euros per tenthApplying the same rule, €160.000 (the portion exceeding the €40.000 exemption) is taxed at 20%. The result is a withholding tax of 32.000 Euros and a net prize of 168.000 euros for each winning ticket.
El second prize of the Child, 75.000 euros per tenthIt also exceeds the tax-exempt threshold. In this case, only €35.000 is taxed, which at 20% represents 7.000 euros in taxesleaving a net prize of 68.000 euros. The remaining prizes in the draw are also below 40.000 euros, so they do not suffer retention.
The impression that “less is paid to the tax authorities” during El Niño stems, above all, from the fact that It awards more medium-sized prizes and fewer giant prizes. than the Christmas Lottery. By concentrating less money in large tickets, there are fewer cases in which the Tax Agency takes such striking amounts as the 72.000 euros per tenth of the Christmas Lottery.
In any case, both at Christmas and in the Epiphany draws and in the rest of the official draws (including ONCE and the regional lotteries) it applies the same tax scheme, in a homogeneous manner throughout Spain.
Do I have to include the prize in my tax return?
A very common question among winners is whether they should declare their prize on their income tax return. The general answer is that they should. It is not necessary to declare the Christmas Lottery prize in the Income Tax campaign, since that money is not considered either employment income or capital gain for the purposes of the annual declaration.
The reason is that taxation It has already been done through the special levy The 20% withholding tax is applied at the time of collection. Loterías y Apuestas del Estado (State Lotteries and Betting), along with collaborating financial institutions, handles the withholding and informs the Tax Agency, so the taxpayer does not need to take any further action on that front.
What must appear on the tax return are the benefits that money will subsequently generate. For example, if the prize is invested en financial productsInterest, capital gains, or dividends will be included in the savings base and taxed according to the applicable rates. If an apartment is purchased and rented out, the rental income must be declared as real estate capital returns.
You also have to be careful with the subsequent donations to family or friendsIf the winner decides to give part of the prize money to another person, that transfer is subject to the Inheritance and Gift Taxwith very different rates and bonuses depending on the autonomous community. In these cases, it's advisable to seek advice to avoid penalties or unexpected payments.
Shared bonuses: how to avoid problems with the tax authorities
One of the most typical images of the Christmas Lottery is that of the shared tenth among family, coworkers, friends, or clubsIt is a deeply rooted custom in Spain and, if managed well, can even lead to tax savings, but it is essential to put everything in writing.
From a tax perspective, the essential point is that each person's participation is accredited from the beginningThis can be done with a simple photo of the lottery ticket sent via WhatsApp to the group, accompanied by a message identifying who is participating and the amount; or through a transfer or Bizum payment clearly specifying that it is a payment for a shared lottery ticket.
When a lottery ticket wins a prize of more than 2.000 euros, ideally, all co-owners go to the bank together to identify its percentage of ownership. The financial institution can then apply the exemption and withholding proportionally to each oneso that each winner can take advantage of their corresponding share of the €40.000 exemption.
Let's imagine, for example, a tenth share of the top prize shared between four siblingsEach person would be entitled to a prize of €100.000. For each participant, the first €40.000 are tax-free, and only the remaining €60.000 are taxable. 20% of that €60.000 amounts to €12.000, so each person would receive 88.000 euros netBetween the four of them, they would pay a total of 48.000 euros to the tax authorities, instead of the 72.000 euros that would be withheld if there were only one holder of the lottery ticket.
The problem appears when Only one person collects the full prize and then distributes the money.If there is no proof that the lottery ticket was shared from the beginning, the Tax Agency may interpret those subsequent bank transactions as... DonationsThese are subject to a specific tax and, in some cases, have a higher tax burden than the lottery tax itself. Therefore, it is advisable to consider options for how to manage and distribute the money From the beginning.
What happens if it is considered a donation or a capital gain?
If the tax authorities conclude that the distribution of the prize does not correspond to a prior co-ownership of the lottery ticket, but to a covert donation, will be applied Inheritance and Gift Tax Regarding the amounts transferred, the tax bill can vary considerably depending on the relationship between the donor and the recipient, and the autonomous community.
In these cases, not only is the advantage of the €40.000 exemption per participant lost, but also Those who receive the money may be required to pay a significant amount.Even if the money comes from a lottery prize that has already been taxed, it's a double tax burden that can be avoided with proper planning from the moment the ticket is purchased.
Similarly, it is important to distinguish lottery prizes from other winnings from gamblingsuch as casinos, bingo halls, slot machines, or private betting. In these cases, the special 20% withholding tax on the amount exceeding €40.000 does not apply; instead The gains are considered increases in net worth. and are integrated into the personal income tax base, potentially reaching higher rates depending on the taxpayer's income level.
Also the prizes from television or radio contests They are usually taxed differently, typically as employment income with withholdings of around 19%. This diversity of tax regimes explains many of the doubts that arise each year and reinforces the idea that the The taxation of the Christmas Lottery is, all things considered, quite simple. compared to other awards.
Social context and spending on the Christmas Lottery
Beyond the numbers, the Christmas Lottery is a social phenomenon. Spain is among the European countries with higher average spending on lotteries and games of chanceAnd the December 22nd draw is by far the most popular. According to the most recent official data, Each Spaniard spends on average more than 60 euros on lottery tickets for this draw, a figure that tends to grow despite crises and inflation.
The tradition of sharing lottery tickets among family members, groups of friends, or coworkers It reinforces the feeling that “if we win, we should all win,” and transforms the lottery into a collective ritual rather than a simple game of chance. At the same time, it makes the The tax impact of the awards reaches a very large number of peopleeither as direct winners or through donations and subsequent distributions.
Although the 20% withholding tax often makes headlines and sparks discussions, experience shows that The effect of these taxes on lottery ticket sales is very limitedHope, habit, and emotional factors outweigh the tax burden when it comes to dealing with trusted administration.
As they say colloquially, “What matters is not what the tax authorities take, but what you keep.”Knowing the rules of the game allows you to adjust expectations: knowing what part of the prize will actually reach your pocket, deciding how to divide it if the ticket is shared, and planning what to do with that money so that it doesn't disappear in a short time.
Looking ahead to the next Christmas Lottery, it's important to understand that You only pay 20% on the amount exceeding 40.000 eurosThe fact that smaller prizes are paid out in full, that shared tickets must be documented, and that future winnings are taxed, helps ensure that luck, if it comes, is accompanied by fewer tax surprises and more considered decisions.
