Browse topics

  • Governing law
    Name Law or Code?

    The Civil and Commercial Code of the Argentine Republic ('CC Code')

    Code

    The Commercial Loyalty Law (Law number 22,802 as amended)

    Law

    Customers' Protection Law (Law number 24,240 as amended)

    Law

    Personal Data Protection Law (Law number 25,326 as amended)

    Law
    Decree 961/2017 and Resolution 915/2017 (of the Secretariat of Commerce modified the regulations of the conditions for those who organizse or promote contests, draws and sweepstakes with the aim of simplifying certain formalities)

    Law

    Note: Prize promotions regulations in Argentina are the responsibility of each province. Argentina is subdivided into twenty-three provinces (provincias) and one autonomous city, the City of Buenos Aires.  Even though the provinces and the City of Buenos Aires exist under a federal system, they have their own constitutions, and local regulations. Organisers/sponsors must be aware of the applicable legislation for the provinces included within the territory.

    Last modified 8 Jan 2019

  • Extra-territoriality

    Yes. Even when a chance-based game or skill-based contest is solely online and no promotion takes place in Argentina, if it is open to Argentinean residents, it will be subject to the laws of our countrArgentinay. As a consequence, national regulators might enforce rules against organiszers/companies operating abroad.

    Last modified 8 Jan 2019

  • Skills competitions

    Yes, but ensure that:

    • The purchase of a product or service is not a requirement in order to be able to participate in the promotion; the elements required to enable a person to participate should be made available for free to anybody willing to participate;

    • No element of chance should be used to determine the winner of the promotion;

    • The Rules are available in Spanish; and

    • You disclose information regarding prizes, territorial scope and participation requirements.

    Last modified 8 Jan 2019

  • Prize draws

    Yes, but ensure that the purchase of a product or service is not a requirement in order to be able to participate in the promotion. The elements needed to enable a person to participate must be made available for free to anybody willing to participate.

    Last modified 8 Jan 2019

  • Selection of winners

    The terms and conditions of the promotion must be made available to the public and the process through which the winners shall be determined needs to be clearly established, including dates and place where the process will take place. It is suggested that the process be supervised by a Notary Public.

    If the awards are to be determined by chance, the mathematic adjudication used to determine the winner needs to be provided; if this is not possible, an approximate estimation of it needs to be provided.

    The names of the winners shall be published within ten (10) days, counted from the end of the promotion, by the same media used to promote the contest/promotion.

    The terms and conditions should indicate date and place where the prizes will be delivered.

    Last modified 8 Jan 2019

  • Judges

    There are no legal requirements in relation to judges and judging in skill competitions. However, the judging criteria should be clearly stated within the Rules and it´s advisable to include the list of judges.

    Last modified 8 Jan 2019

  • Prizes

    Prizes awarded must be as described in their marketing communications, or reasonably equivalent to the description.

    No forbidden and/or illegal goods should be awarded as prizes.

    Last modified 8 Jan 2019

  • Registration requirements and fees

    Note that in February 2018, the government of Argentina dissolved the National Lottery (LNSE). As a result, at least for now, Argentina no longer requires sweepstakes and contests to be registered. Prior to the dissolution, only promotions/contests in which the winners were totally or partially determined by chance – involving prizes greater than  6,666 Pesos (approx. US$148) – needed to be registered with LNSE and had to meet all the applicable requirements.

    With regard to skill-based contests, they do not require registration. However, the Official Rules must conform to local law. When a prize is awarded to a winner selected by chance a 31% special tax is levied. If the prize is cash, the entity awarding it must withhold and pay for the tax. If the prizes are goods the beneficiary must provide the entity awarding the prize the amount of money requested to pay for the special tax. Specific provincial taxes may apply in different jurisdictions.

    Last modified 8 Jan 2019

  • Other local requirements

    Promoters must provide certain and detailed information in relation to the prize promotion, including the essential characteristics of the prizes offered, and any other relevant terms.

    Conditions expressed in advertisements, brochures, circular letters or any other media are considered to be included in the contract concluded with the consumer, as binding terms.

    In such respect, Organiszers must comply with the requirements as established by Decree 961/2017 and Resolution 915/2017 of the Secretariat of Commerce.

    Last modified 8 Jan 2019

  • Timing

    For chance-based promotions, time is required to request the permit from the Provinces that regulate contests/promotions at a local level. Time and costs involved may vary depending on the Province.

    Note that Provinces regulating promotions/sweepstakes at a local level can be excluded in order to avoid compliance with local regulations.

    Last modified 8 Jan 2019

  • Translations

    Yes, the terms and conditions must be in Spanish.

    Last modified 8 Jan 2019

  • Penalties for non-compliance

    According to the Commercial Loyalty Law, the penalties for non-compliance are the following:

    • Fines from AR$500 (approximately US$11) to AR$ 5,000,000 (approx. US$111.000);

    • Suspension for up to 5 years from the providers registries that allow promoters to conclude contracts with the State;

    • Loss of concessions, tax or special credit benefits;

    • Closure of the facility for up to 30 days.

    According to the severity of the breach, and if it is convenient, publication of a notice of the penalty in the same media may occur.

    In case of fraud, criminal actions may be initiated.

    Last modified 8 Jan 2019

  • Restrictiveness of regulations

    Due to the recent dissolution of the National Lottery there are only a few restrictions on prize promotions in Argentine national regulations. However, as previously mentioned, some provinces like Mendoza, Córdoba, Salta, Neuquén and Tierra del Fuego have their own local regulations. In addition, forbidden acts under the Competence Defense Law must be avoided. Advertisements that contain false indications, lead or could lead to mistake and/or are abusive, discriminatory, or lead the consumer to behave in a dangerous or harmful way, must be avoided as well.

    Last modified 8 Jan 2019

  • Regularity of sanctions

    Fines and prison sentences are rarely imposed.

    Generally, in cases of breach, a complaint is submitted to the Consumer's Defense Office, where a monetary sanction can be applied to the non-compliant entity, and it can also be requested that the misleading advertisement be deleted.

    Last modified 8 Jan 2019

  • Key contacts
    Matias Zegers
    Matias Zegers
    Partner DLA Piper BAZ|NLD Spa, a Chilean Sociedad por Acciones [email protected] T + 56 2 2798 2604 View bio
    Marcelo Etchebarne
    Marcelo Etchebarne
    Managing Partner DLA Piper (Argentina) [email protected] T +5411 41145500 View bio

Registration requirements and fees

Are there any registration requirements, or any fees/taxes payable?

Argentina

Argentina

Note that in February 2018, the government of Argentina dissolved the National Lottery (LNSE). As a result, at least for now, Argentina no longer requires sweepstakes and contests to be registered. Prior to the dissolution, only promotions/contests in which the winners were totally or partially determined by chance – involving prizes greater than  6,666 Pesos (approx. US$148) – needed to be registered with LNSE and had to meet all the applicable requirements.

With regard to skill-based contests, they do not require registration. However, the Official Rules must conform to local law. When a prize is awarded to a winner selected by chance a 31% special tax is levied. If the prize is cash, the entity awarding it must withhold and pay for the tax. If the prizes are goods the beneficiary must provide the entity awarding the prize the amount of money requested to pay for the special tax. Specific provincial taxes may apply in different jurisdictions.

Australia

Australia

Registration Requirements

Australian Capital Territory (ACT)

A permit must be obtained from the ACT Gambling and Racing Commission. The fee to apply for a trade permit will depend on the prize value. As at the 21 December 2018, the fees can range from A$211 (approx. US$146) to A$3,372 (approx. US$2,335).

New South Wales

A permit must be obtained from the Office of Liquor, Gaming and Racing. The fee to apply for a trade permit will depend on the prize value and will range from A$80 (approx. US$55) to A$2,185 (approx. US$1513). These are the fees as at 21 December 2018 and are subject to change.

Northern Territory

A permit is required for a major trade lottery where prizes total more than A$5,000 (approx. US$3,463). No fee is required to obtain the permit.

Please note that no permit is required if it has been already obtained elsewhere.

South Australia

A permit must be obtained from the Office of the Liquor Gambling Commissioner for a 'major trade' promotion lottery, that is if the total value of all prizes in the lottery exceeds A$5,000 (approx. US$3,463).

A permit is also required for trade promotion (instant prize) lotteries.

The fee to apply for a 'major trade' or 'instant prize' permit will depend on the prize value but will range from A$195 (approx. US$135) to A$3,938 (approx. US$2,727). There is also a premium fee to speed up the application process which ranges in price from A$391 (approx. US$271) to A$7,867 (approx. US$5,449). These are the fees as at 21 December 2018 and are subject to change.

Queensland

Permit is not required.

Tasmania

Permits are not required.

Victoria

Permits are not required.

Western Australia

A permit is not required but the promotion must comply with the WA blanket permit conditions (see here).

Taxes Payable

No taxes payable in any Australian jurisdiction.

Austria

Austria

Registration Requirements

Certain prize draws (e.g. lotteries) require an authorization from the Ministry of Finance and are subject to strict regulations.

Fees / Taxes payable

Certain prize draws (e.g. lotteries) require payment of taxes.

Prizes from promotional free of charge games are subject to a tax of 5% of the total value of all prizes (if the value of all prizes exceeds €10,000 (approx. US$11,203). The prize promotion organizers or contracting parties are liable for the tax.

Belgium

Belgium

Registration Requirements

There is no requirement to register prize promotions.

Games of chance (involving an element of chance and requiring the participant to make a stake) can only be offered by companies that have obtained a license from the Belgian Gaming Commission (in principle: casinos, arcades and betting shops). The number of these licenses is limited.

Lotteries (solely depending on chance) are generally prohibited and can only be organized by the Belgian National Lottery or, after formal approval, by some non-profit organizations for charitable purposes. In the latter case the competent authority for providing formal approval depends on the geographical scope of the lottery. Companies can work together with such approved not-for-profit organizations.

Fees/Taxes payable

These licensed companies for games of chance as referenced above in 'Registration Requirements' are subject to a specific tax regime.

In the current interpretation and enforcement of the legislation relating to lotteries, no specific taxes are being imposed on the organizing company.

Brazil

Brazil

An Authorization Certificate permit must be obtained from SEFEL.

The fee to apply for this Authorization will depend on the prize total value: 

Prize Value Fee

Up to R$ 1,000.00
(Up to approx. US$250)

R$ 27
(US$7)

From R$ 1,000.01 to R$ 5.000.00
(From approx. US$ 250 to US$ 1,254)

R$ 133
(US$ 33)

From R$ 5.000,01 to R$ 10.000.00
(From approx. US$ 1,254 to US$ 2,507)

R$ 267
(US$ 67)

From R$ 10,000.01 to R$ 50.000.00
(From approx. US$ 2,507 to US$ 12,536)

R$ 1,333
(US$ 334)
From R$ 50,000.01 to R$ 100,000.00
(From approx. US$ 12,536 to US$ 25,072)

R$ 3,333
(US$ 836)

From R$ 100,000.01 to R$ 500,000.00
(From approx. US$ 25,072 to US$ 125,360)

R$ 10,667
(US$ 2,674)

From R$ 500,000.01 to R$ 1,667,000.00
(From approx. US$ 125,360 to US$ 417,951)

R$ 33,333
(US$ 8,357)

Above R$ 1,667,000.01
(Above approx. US$ 417,951)
R$ 66,667
(US$ 16,715)
Note: Fees as at 10 January 2019 and subject to change.
Canada

Canada

The only jurisdiction in Canada that requires registration is Québec. Registration and payment of a registration fee at least 30 days in advance is required if the total value of the prizes exceeds a minimal threshold (currently CDN$1000 (approx. US$743)). It may also be necessary to pay a bond in some cases.

Chile

Chile

In relation to competitions and draws authorized by the Law on the protection of consumer rights, although it is not mandatory, it is recommended to deposit before a notary a copy of the terms and conditions of the competition or lottery. In addition, participants should be informed that the terms and conditions were deposited before a notary and they must be made available to the contestants, which is usually achieved by publishing the terms and conditions on the contest’s web page.

The operators can only use the machines or implements previously approved and registered in a registry that carries the Superintendence of Casinos (as stated in the Law of Casinos).

In regard to taxes, the Chilean VAT Law stated the delivery or free distribution of movable goods for promotional purposes is subject to Value Added Tax of 19%. The promoter should charge this tax.

China

China

Registration Requirements

For retail stores conducting promotions in relation to a store opening, festival celebration or store anniversary celebration etc, unless the retails store's premises is less than 3,000m2, the promotion must be filed with the Administration for Industry and Commerce within 15 days after the promotion is finished.

Fees / Taxes Payable

There are no fees payable.

The grant of prizes is generally deemed as sales of goods for PRC enterprise income tax (EIT) and value-added tax (VAT) purposes, and therefore may subject the enterprise promoter to PRC EIT and VAT.

The individual winner is generally liable to PRC individual income tax (IIT) (normally at the tax rate of 20%) if the winner receives the prizes for free. Such IIT should be withheld by the enterprise promoter.

If the tangible prize needs to be brought into China from overseas, it may trigger additional PRC import taxes (such as import VAT, consumption tax, and customs duties).

The above PRC tax implications may vary depending on each case.

Note: This is a broad comment in relation to general commercial prize promotions and does not apply to all skill competitions such as large-scale competitions including sports competitions and singing contests on TV which may require additional registration and/or fees.
Colombia

Colombia

Registration Requirements

To carry out a prize promotion in Colombia, an authorization from Coljuegos, which is the public entity in charge of administering the state monopoly of gambling activities, must be obtained.

To this effect, where there is a payment to enter, a fee equal to 14% of the value of the gross income (100% of the tickets sold) must be paid.

For promotional games (with no direct payment to enter), as they do not generate an income, the fees are calculated based on the value of the prizes to be awarded.

An administrative fee equal to 1% of the value of the prizes to be awarded must be paid.

Regarding online games, operators have to pay annual fees equivalent to 811 times the legal minimum monthly wage (US $223,867 approximately) and fees equal to 17% of the gross income.

For these purposes, online games are understood as games of chance in which the sweepstake and the payment of the prize are made through internet. If the sweepstake is made through physical means and the internet is only a means of commercialization, the game is not considered an online game.

Fees/Taxes payable

Players will be subject to capital gain tax at a 20% rate on the amount of paid prizes. This tax will be paid completely through the withholding applied by the prize promotion operator.

Prize promotion and gaming activities, unlike online gaming activities, are subject to 19% VAT. Tax basis varies depending on the type of prize promotion/ gaming activity.

Prize promotion operators are subject to corporate income tax at a fixed rate of 33% over any net income generated from the prize promotion activities in Colombia. Corporate income tax rate will be reduced progressively until 30% as of 2022. For purposes of calculating the net taxable income, the online gaming/ prize promotion operator can treat as deductible expenses the prizes paid to the participants.

Finland

Finland

Registration Requirements

There are no registration requirements for prize promotions.

Fees/Taxes payable

Payable taxes depend on whether the prize promotion is based on skill or chance.

Where winning the prize is based on talent or skill, the prize is considered as income for the winner and the winner must pay taxes in accordance with his or her income tax.

By contrast, where the prize is won purely by chance, the winner of the prize must pay a lottery tax in Finland amounting to 30% of the value of the prize.

France

France

No.

Germany

Germany

Registration Requirements

Prize promotions do not require any registration or permit.

Fees/Taxes payable

There are no specific taxes or fees for prize promotions in Germany.

Hong Kong

Hong Kong

Registration Requirements

In making an application for one of the two licenses, it is necessary to forward to the Licensing Authority various application forms and supporting documents, which include details of the specific game involved.  In considering whether to grant the Trade Promotion Competition License, the Licensing Authority will take into account the public interest and will refuse to grant a license if the promotion is believed to be fraudulent or indecent or if the applicant is identified as a 'dishonest trader'.

In considering whether to grant the Amusements With Prizes License, the Licensing Authority will take into account whether there is presence of a gambling element in the game, and the existence of obscene or indecent content, as well as the safety element of the game for the public.  

Fees / Taxes Payable

In order to obtain a Trade Promotion Competition License,  it is necessary to submit the relevant documentation and forms to the Licensing Authority, along with the relevant fee:

  • $1,590 (approx. US$203) for a license

  • $125 (approx. US$16) for a duplicate license, and

  • $155 (approx. US$20) for a change in license particulars

In order to obtain an Amusements With Prizes License, it is necessary to submit the relevant documentation and forms to the Licensing Authority, along with the relevant fee:

  • $3,200 (approx. US$408) for a license

  • $125 (approx. US$16) for a duplicate license, and

  • $155 (approx. US$20) for a change in license particulars

Please note that the fee above areexclusive of the fees for the Places of Public Entertainment License.

India

India

Registration Requirements

Prize Competition Act, 1955 requires a person who promotes or conducts any 'prize competition' (as defined above) to obtain a license wherein the total value of the prize(s) to be offered in any month does not exceed Rs 1,000 (approx. US$14). The promoters of such prize competitions are also required to keep accounts and submit the same to the licensing authority at regular intervals determined by the applicable laws.

Fees / Taxes Payable

Depending on the State in India where the license is obtained, a nominal amount will need to be paid as a license fee. In relation to tax obligations, a promoter of a prize competition (irrespective of residency) is liable to withhold tax at a certain percentage of the prize money paid to an Indian resident, should the value of such prize money exceed a pre-determined threshold.

Ireland

Ireland

Registration Requirements

There is no requirement to register prize promotions.

Fees/Taxes payable

Gaming and Lotteries Acts: For a lottery operated under license, the statutory fee is €150 (approx. US$168). The promoter must make an application to the District Court for the lottery license, which involves further costs related to notifying the police, and legal fees. The application must show the charitable purpose of the lottery, and how the other restrictions applying to lotteries will be satisfied.

Regarding fees or taxes associated with prize promotions - in general, winnings from games with prizes, betting, lotteries or sweepstakes are not taxable in Ireland unless the winner is doing this as part of a trade or business (in which case, they would be taxable) or the prize winnings are derived by reason of their employment (in which case, they would be taxable and the employer would have a responsibility to account for the relevant tax through the PAYE system).

Italy

Italy

Registration Requirements

The terms and conditions must be filed with the Ministry of Economic Development at least 15 days before the beginning of the prize promotion.

Fees/Taxes payable

In case of Skills Competitions and Prize Draws arranged by any entity established outside the Italian territory, it shall appoint a so-called 'fiscal representative' (i.e. either a person or entity resident in Italy) for tax purposes or, if the entity is based within the EU or in a country which has reached a specific international agreement with Italy, a direct identification VAT number may be requested from the Italian Tax Authority.

Organizers must post a guarantee equal to 100% of the value of prizes offered.

Organizers cannot deduct VAT on the prizes of promotions and shall pay a tax equal to 25% of the value of the prizes awarded.

Japan

Japan

Registration Requirements

There are no requirements for prize award promotion operators to register.

Fees / Taxes Payable

No fees need to be paid to an authority to run a promotion. Operating a prize promotion is in itself not taxable, although the prize winners must pay income tax on the value of the prize they receive. On the other hand, the cost of the prizes awarded under a promotion can be deducted from the gross income of such promoters.

Mexico

Mexico

It is necessary to have either a registration or authorization from the Ministry of Interior through the GOG for any of the limited authorized games that involve chance and prize draws as discussed above.

In addition, there are certain government duties to be paid, such as participation on earnings by the government, fees for inspections and registration of the prize draw, etc.

As an example, a government duty of MXN$ 1,695.80 (approx. US$88) is to be paid for each of the inspections to be carried out by the GOG (i.e. inspection prior to the issuance of the authorization or the delivery of the prize to the winner).

Further, if the prize is not collected by the winner, the organizer needs to deposit such unclaimed prize, either physically or its value in cash, before the GOG.

The Income Tax Law provides that Income Tax may be withheld from the prize winner and be payable by the prize promotion organisers for the income generated to the prize winner. This only applies for prize draws organized in Mexico. The percentage is 1% over the total amount to be distributed among the winning tickets in states where there is no income tax for prize draws or such tax is not higher than 6%. However, in the states where such state tax is higher than 6%, the federal tax increases to 21%. The tax should be withheld by the party making the payment, and it is considered as a final tax, which must be remitted to the Mexican Tax Authorities. In cases where a corporation or a non-profit organization receives this type of income, they may be relieved from a withholding tax; but should report it separately (Art. 138).

Notwithstanding the above, if an entity or individual intends, exclusively, to conduct a promotion, it is only required to notify or obtain an authorization before the Consumer Attorney-General ('Profeco') if such notification or authorization is required by any Compulsory Official Standard or could potentially harm the consumer (Art. 47 Consumer Law). A promotion is a prize draw involving a product or service provided by the promoter.

Netherlands

Netherlands

Registration Requirements

No registration requirements apply.

Fees/Taxes payable

No registration fees apply.

Gaming tax is 30.1% and can be paid by either the promoter or the prize winner.

For prizes under €449 (approx. US$500), no taxes have to be paid by the promoter or the prize winner.

New Zealand

New Zealand

Provided a prize promotion is undertaken as a 'sales promotion scheme' it will not require a license, regardless of the value of the prizes offered.

Norway

Norway

Registration Requirements

No registration requirements apply to prize promotions (i.e. skills competitions or prize draws), other than to the extent they are lotteries for which a licence is required.

Fees/Taxes payable

It is the winner who may be subject to taxes. There are three categories in relation to prize promotions:

  1. Income / prizes that are not taxable regardless of their value (i.e. bingo, certain registered lotteries, horse racing)

  2. Income / prizes with a value of less than 10,000 NOK (approx. US$1,140) are not taxable (i.e. competitions, skills competitions when not related to winner's work/education, other lotteries);

  3. Fully taxable income/prizes (ie skills competitions won when closely related to the winner's work or education).

Where the prize is taxable, it is taxable in its entirety.

Poland

Poland

Registration Requirements

There is no requirement to register prize promotions. In case of promotion lotteries, the organizer is obliged to obtain a permit, subject to a payment.

Fees/Taxes payable

The tax consequences must be determined on a case by case basis, as different types of the prize promotions are subject to different tax consequences - especially if a given prize promotion is considered to be a 'premium sales program'. Taking into account that in many cases also the intermediary companies are engaged in organizing prize promotions, determining the tax aspects of such promotions is a very complex issue. At the same time, tax consequences shall be determined not only from the perspective of the company organizing the promotion, but also from the perspective of the individual receiving a prize – as some prizes are subject to Personal Income Tax Law (and the company giving away the prize may be considered as a tax remitter).

From the perspective of a company organizing the prize promotions – the following aspects of the transaction shall be taken into account:

  • Whether the cost of the promotion can be considered as a tax deductible cost (in most cases – yes, they can);

  • Whether the input VAT on expenses incurred in relation to promotion can be deducted from the output VAT;

  • The prize obtained by a given individual is subject to personal income tax or is exempted from taxation, and consequently, whether the company organizing the game is responsible for withholding tax (and in practice) economically paying any tax.

The above issues, especially the one related to Personal Income Tax, must be verified before organizing the prize programme – as, in practice, the tax issue may influence the prize amount. In Poland, if a prize is not covered by the exemption from Personal Income Tax (i.e. for a specific prize programme, the prizes of value lower than approx. EUR 470 are exempted from PIT), the company organizing the prize promotion usually gives additional prizes in cash to cover the Personal Income Tax).

Portugal

Portugal

Registration Requirements

For prize draws – filing of a prior authorization request with the competent Authority (to be assessed on a case by case basis) is required.

Fees/Taxes payable

For prize draws – when filing the prior authorization request with the competent Authority, the payment of an official fee of €500 (approx. US$560) is required.

Regarding taxation issues, all prizes to be delivered are subject to Stamp Duty at a 45% rate. The tax is due at the moment the prize is granted to the beneficiary and the amount of the tax must be paid by the entity granting the prize by the 20th of the month after the month in which the prize is granted.

In case SGMAI is the competent Authority (to be assessed on a case by case basis), within 8 days after the end of the 90 day period (such 90 day period starting from the date of selection of the winners), the promoter must present evidence to the General-Secretary of Ministry of Internal Affairs that the tax due has been paid.

Romania

Romania

Registration Requirements

No registration requirements apply to prize promotions.

In terms of whether the organizer of a promotion should apply for tax registration in Romania - the position is unclear because the law is not straightforward as regards the nature of revenue obtained by individuals participating in promotions, which is relevant for tax registration purposes.

If the revenues qualifies as 1) a prize, then registration is required. However if the revenue qualifies as (2) revenue from abroad, no registration requirements exist. In the meantime, the safest approach would be for the organizer granting the prize to apply for tax registration in Romania.

Fees/Taxes payable

According to the provisions of the Romanian Fiscal code, income from prizes obtained by a Romanian individual from a non-resident entity may be classified either as an income from a prize or as an income received from abroad. We are not aware of the approach of the tax authorities in Romania as regards the classification of the income received by a Romanian individual in such cases.

In our opinion, the safest approach for the payer of the income / entity granting the prize would be for the income paid to be considered as income from prizes, in which case the payer of the income has the obligation to withhold, declare and pay the relevant income tax towards the Romanian state budget; therefore a tax registration process should be followed in this respect, while the taxes / fee registration due are immaterial.

Nevertheless, if the income is classified as income received from abroad, the non-resident entity has no obligation in respect of income tax due in Romania, such obligation falls under the liability of the individual obtaining the income.

Russia

Russia

Registration Requirements

There are no specific requirements for skill competitions. However, lotteries are subject to the heavy regulatory regime. This means the operator of the lottery (i.e. the entity running the lottery) must agree to a contract with the Ministry of Finance or Ministry of Sports ('organizers of the lottery') on the basis of a preliminary held state tender.

Fees / Taxes Payable

For lotteries, a state fee of 10% is payable to the state budget.

Saudi Arabia

Saudi Arabia

Registration Requirements

The ACFR provides, amongst other things, that commercial entities may not conduct or advertise a promotion/competition unless it has first obtained a license from the Director-General of the Anti-Commerce Fraud Department or the competent branch of the Ministry of Commerce and Investment (in practice, via the Chamber of Commerce).

Fees / Taxes Payable

The ACFR does not stipulate the license fees for a license an application. This should be confirmed with the competent authorities before at the time of making any application.

Any tax implications in relation to prize promotions should be confirmed directly with specialist tax advisors.

Singapore

Singapore

Registration Requirements

The operation of prize draws in Singapore is generally prohibited unless they fall under one of the statutory exceptions or the organizations apply for an exemption with the MHA to carry out certain prize promotion activities.

Under the RGA, a person can apply for a certificate of exemption that would authorize it to provide a Singapore-based remote gambling service with a Singapore-customer link where:

  • The service is provided in the course of carrying on a business in Singapore

  • The central management and control of the service is in Singapore

  • Any relevant internet content is hosted in Singapore

Fees / Taxes Payable

We are not aware of applicable taxes pursuant to the RGA as remote gambling is currently prohibited under the RGA unless a certificate of exemption has been granted.

The CGHA and the PLA do not expressly set out eligibility criteria for a grant of an exemption from the prohibitions set out in the CGHA, or a permit pursuant to the PLA. The exemptions and permits are granted on a case-by-case basis.

Under the PLA, the promoter of a private lottery is required to pay a duty of 30% on the total amount raised from any private lottery, unless it is conducted using a fruit machine (slot/poker machine) and a duty of 9.5% on the total amount wagered by players of each fruit machine in order to play it (without any deduction of winnings paid out).

Pursuant to the CGHA, there are no duties levied on prize promotions, provided that the prize promotion excludes the placing of bets, or the promotion of sweepstakes, on the result of a horserace or other race, regardless of whether the race takes place in Singapore or elsewhere.

South Korea

South Korea

Registration Requirements

In terms of registration requirements, as discussed above in the section on prize draws, any business involving 'speculative acts' must be approved in advance by the district police. However, it is unclear whether this requirement applies to a contest in which the contest sponsor does not directly collect commission or fees from the contest itself, but rather receives an indirect benefit, such as publicity.

Fees / Taxes Payable

There are no fees payable.

In terms of taxes, a prize is considered 'other income', and subject to personal income tax and local income surtax. Where the value of a prize exceeds ₩50 000 (approx. US$42) the prize-giver is required to withhold 22% of the prize amount for tax purposes. When a Korean company (or foreign company's Korean affiliate) engages in prizes to promote sales, the value of the prizes is deductible as expenses incidental to sales for corporate income tax purposes.

Spain

Spain

Registration Requirements

No authorization or prior communication to Spanish Gambling Authorities is required* when the prize draw has a national scope (i.e. the promotion is addressed to residents in more than one Spanish region (comunidad autónoma).

In the case of promotions with regional scope (i.e. those promotions only addressed to residents in one Spanish region – comunidad autónoma), regional regulations would apply and in some cases, prior communication to the corresponding regional authorities is required.

Fees / Taxes payable

Prize draws organizers with national scope must pay a gambling tax of 10% of the total value of prizes on offer.

Prize winners shall be subject to Spanish Personal Income Tax in connection with prize awarded.

* Note: Genuine gambling activities do require authorization from the gambling authorities.
Sweden

Sweden

Registration Requirements

For chance-based prize promotions, where participation requires payment of a wager, stake or similar, a Swedish gambling license is required.

No registration requirements apply to skill-based prize promotions or chance-based prize promotions which do not require payment of a wager, stake or similar.

Fees/Taxes payable

The winners in a skill-based promotional competition may be liable to pay income tax and the promoter may be liable to pay social security contributions on the prizes.

For chance-based prize promotions, where participation requires payment of a wager, stake or similar, the promoter may be liable to pay Swedish gambling tax.

Thailand

Thailand

Registration Requirements

Yes, according to the TGA, a License is required to run prize promotions in the course of business.

Fees / Taxes Payable

The License fees vary, depending on the duration of each event as shown in the table below.

License Validity Fee (฿)
1 day 300 (approx. US$9.50)
Not exceeding 7 days 600 (approx. US$19)
Not exceeding 1 month 1,500 (approx. US$47.50)
Not exceeding 6 months 6,000 (approx. US$190)
Not exceeding 1 year 9,000 (approx. US$285)

If the prize is valued more than ฿1,000 (approx. US$32), it is subject to 5% withholding tax, which will be deducted by the arranger. It is worth noting that cash cannot be awarded instead of the complimentary gifts or prizes specified in the License.

United Arab Emirates - Dubai

United Arab Emirates - Dubai

Registration Requirements

A permit must be obtained from the DED for all types of prize promotion campaigns.

Fees / Taxes Payable

Fees vary according to campaign details (prize value, number of sites etc.) and to whether it is related to draws or to instant prizes. A list of fees is provided by the DED for certain standard campaigns. For other types of campaigns, the DED will decide on the fees payable after reviewing the details of the specific campaign.

Please find the list of fees for certain standard campaigns in the Guidebook (pp.19 and 20) here.

Any tax implications in relation to prize promotions should be confirmed directly with specialist tax advisors.

United Kingdom

United Kingdom

Registration Requirements

There are no requirements to register prize promotions.

Fees/Taxes payable

The tax consequences must always be considered, in particular VAT and income tax/corporation tax and specialist advice should be sought. All will depend on the facts. Tripartite arrangements tend to be particularly complicated.

Generally, if publicity, advertising or some other form of consideration is received in return for incurring the cost of the prize, the promoter may deduct the cost of the prize for corporation tax purposes but must account for VAT on the supply of the prize and the promoter may claim input VAT on the cost of the prize.

If the prize is a true gift, the promoter only needs to account for VAT where the value of that prize exceeds £50 (approx. US$64) under the business gift rules but then will be entitled to claim input VAT on the cost of the prize. The promoter will not generally be able to claim a deduction for the cost of the prize for corporation tax purposes unless the promotion is open to the general public and the prize is one of the promoter's products.

Ukraine

Ukraine

Registration Requirements

There is no requirement to register prize promotions.

Fees/Taxes payable

Tax aspects of prize promotions are as follows:

Corporate Profit Tax (CPT)

Basic CPT rate is 18%. Generally, the cost of prizes purchased by a prize promotions operator is deductible for CPT purposes. The general approach of the Ukrainian tax authorities is that all deductions must be supported with the appropriate original documents.

Value Added Tax (VAT)

Generally, the transfer of prizes by the prize promotions operator to the winner is treated as a taxable supply for VAT purposes (if such operator is a VAT-payer). Thus, prize promotions operators must charge 20% VAT on the value of the prize but in any case the VAT base may not be lower than the purchase price of such prize. Such VAT is not collected from prize winners and is paid by operators at their own expense.

Personal Income Tax (PIT)/Military Duty

Basic PIT rate is 18%. Temporary military duty is 1.5%.

Prize promotions operators are obliged to act as a tax agent for the winner. If the amount of the prize value is less than UAH 1043.25 per (for 2019) (approx. US$39), it is exempted from PIT and military duty.

Prize promotions operators are liable to pay PIT and military duty on behalf of the winner if the prize amount exceeds UAH 1043.25 (for 2019) (approx. US$39). In cases where the prize is provided in non-monetary form, WHT and PIT are paid by prize operator at its own cost (on top of the value of prizes).

It is also important to note that operators cannot act as tax agents in those cases where prizes are distributed to an unidentified recipient.

Lotteries have further specific tax treatment.

United States

United States

Overall Summary

In general, a sponsor of a sweepstakes or competition where the prize has a value of US$600 or more must report the value of the prize to the Internal Revenue Service on a Form 1099 with the name and tax identification of the winner.

Federal Law

No specific rules other than general tax reporting rule stated above.

Selected States

A number of states require either sweepstakes or skill contests to be registered.

Arizona – Requires any 'intellectual contest' that involves the purchase of a product to be registered with the Arizona Attorney General. A.R.S. § 13-3311.

Florida – Requires the operator of a game promotion where the total announced value of the prizes exceeds US$5000 to register and post a bond with the Department of Agriculture and Consumer Services. Fl. Stat. § 849.094(3).

New York – Requires the sweepstakes operator to register and provide a bond for any sweepstakes where the total value of prizes exceeds US$5000. N.Y. Gen. Bus. Law §369-e.

Rhode Island – Requires a retail establishment that offers the opportunity to receive gifts, prizes, or gratuities, as determined by chance, in order to promote its retail business, where the total announced value of the prizes offered to the general public is in excess of five hundred dollars ($500) must register with the Rhode Island Secretary of State. R.I. Gen. Laws § 11-50-1.