In 2011, Pius Heinz of Germany won the main event of the World Series of Poker and a nice tax-free $8,715,638. Well, maybe it’s not tax-free.
Via @Taxdood and @Taxnews1 comes word that a German court in Cologne will be hearing the appeal of a former professional poker player. The German tax agencies are claiming that the player was in a “commercial activity” and thus owes taxes on the approximately $1 million that this player won. The news story alludes to other German professional poker players receiving tax notices so the verdict in the test case will matter.
As Taxdood noted, “Ironically, in order to prevail the taxpayer must demonstrate success in poker relies mainly on luck, not skill.” Hopefully for German poker players the German court will not see the recent court ruling in New York that found poker to be a game dominated by skill, not luck.
Current German tax rates range are 14% (€8,005 – €52,881), 42% (€52,882 – €250,730), and 45% (€250,731 or greater). If Mr. Heinz owes tax on his winnings that would shave €2,993,502 off his winnings (he would have netted about €3,710,835, or $4,824,085). That’s not bad, but clearly $8.7 million is better.
I’ll report on the decision when it’s announced.