What Counts as the Player's Winnings
From the player's position, the tax question begins with a definition: what is the winnings received from a person engaged in the gambling business. The eighth article of the Tax Code of Georgia determines: winnings received from a person engaged in the gambling business is income determined by the positive difference between the amount received and the amount placed by the physical person — the player — from gambling and profitable games on one ticket, token, coin and/or other means.
This definition contains two important details. First: winnings are a positive difference — the growth between what was received and what was placed. Second: the definition is set at the level of a unit — one ticket, token, coin or other means, so the positive difference is determined separately on each such unit. When a player records results, it is precisely this unit-based accounting that must serve as the foundation.
Such an approach may at first glance seem like extra work, but it is precisely what protects the player from two errors: in a cumulative view, a person often forgets that results on different units stand separately in the eyes of the Code; and conversely, that in calculating the positive difference only the data of the respective unit must be included. Properly arranged notes answer this question at a glance and turn the calculation of the liability into a transparent procedure.
The Practical Meaning of the Positive Difference
It follows from the definition that only a positive difference counts as winnings: if the amount received or the value of the item exceeds what was placed, the difference is income; if not, no winnings arise. The value of an item is also included in the definition, so winnings are not necessarily monetary — winnings in kind are valued under the same construction.
For a player this means that a cumulative view of one's own results is not enough: what matters is the result recorded on each unit, because that is the measure by which the Code measures winnings. Maintaining such records — keeping data on tickets, tokens and other means — is the basis for the correct calculation of the liability.
Rates
The rates are established by the eighty-first article of the Code. Under the general rule, the taxable income of a physical person is taxed at 20 percent, unless something else is provided by the Code. For the gambling sphere the Code also contains a separate rate: the category of amount provided for in its other norm is taxed at 5 percent. This preferential rate represents a different approach, and its exact scope must be verified against the norm that determines the respective amount.
Therefore the player's tax account rests on two questions: first, whether the winnings were calculated at the unit level in accordance with the definition; second, which rate corresponds to the concrete income — the general 20 percent or the separately established 5 percent for the amount subject to the respective norm of the Code.
Declaration and Documentation
The deadlines and procedures of declaration are established by other norms of the Code — this is a separate layer that must be verified together with the current edition. What a player should keep in his own interest: data on tickets, tokens, coins or other means, and confirmation of the amounts received and the value of items. Such documentation simplifies the calculation of the liability and reduces the risk in communication with the tax organ.
Remember also: the taxation of the player's winnings and the taxation of the organizer are different regimes. The organizer pays tax on its own income, the player on his own winnings; these two accounts do not merge, although both rest on a common culture of record-keeping.
One practical conclusion as well: if you played in different formats — ticket-based, token-based or by other means — the records must be kept separately for each of these formats, since the definition does not limit the type of means. The more clearly the history of each unit is recorded, the easier it becomes to establish the moment when winnings actually arose — and the more reliable these records will be in communication with the tax organ.
Frequently Asked Questions
How are a player's winnings calculated?
By the positive difference between the amount received and the amount placed on one ticket, token, coin and/or other means. This definition is established by the eighth article of the Tax Code.
What is the rate?
Generally, the taxable income of a physical person is taxed at 20 percent; the Code also provides a 5 percent rate for a separate category of amount, whose scope must be verified against the respective norm.
Are winnings in kind taxed?
The definition includes the value of an item — winnings are determined as the positive difference of value received in both monetary and in-kind form.
Where are the declaration rules?
The deadlines and procedures of declaration are established by other norms of the Code; their application is reconciled with the current edition. The basis for calculating the player's winnings is the definition described above.
How We Help on Legal.ge
The Legal.ge team consults players on the taxation of winnings: we will examine your situation in accordance with the definition, help you organize the recording of results and tell you which rate applies to which income.
Contact us through Legal.ge — tell us about your case, and we will place your tax account on a legal foundation.