Winnings and prizes

What it means

Winnings and prizes are income from competitions, lotteries, betting and gambling. For personal income tax they count as other income, and their taxation depends on the type of game or competition and on their value.

Winnings from gambling operated under a licence are tax-exempt. Lottery winnings and competition prizes are exempt up to a statutory amount per win or prize. Above that threshold they are taxed either by withholding or in the tax return.

A distinction is also made between cash and non-cash winnings, such as a car, a holiday or electronics. For a non-cash win, its value is treated as income, and the winner must make sure to declare it correctly if the organiser did not withhold tax.

How it works in practice

For cash winnings above the exemption threshold, the organiser usually deducts tax by withholding and the winner receives the net amount. For non-cash winnings, or where no tax was withheld, the winner reports the income in their tax return as other income.

A company running a marketing competition should check the tax and contribution consequences in advance. A prize for a customer is usually an advertising expense, but the organiser may have to withhold tax or inform the winner of the value of a non-cash prize.

If a company rewards its own employees through a competition, it is usually employment income, taxed and subject to contributions like wages or benefits in kind. The rules for competition prizes do not apply to such payments because they are linked to employment.

What to watch out for

The exemption threshold applies to each win separately, not to the whole year. With several wins from different organisers, each must be assessed on its own, and for non-cash wins proof of value should be kept in case of an inspection.

Winnings from unlicensed gambling, for example with foreign operators lacking a Slovak licence, may not be exempt. For winnings from abroad, the rules of the country where the win arose and any double tax treaty must also be considered.