Legal trick so that the Treasury does not keep 20% of the Christmas Lottery prize

The 400,000 euros of the Christmas jackpot will remain at only 328,000 euros after paying taxes for the first prize of the draw and the same will happen with the second and third prizes.

The taxation of the Christmas Lottery is very simple. The Treasury claims 20% of all prizes that exceed 40,000 euros. Amounts below that figure are exempt from tax and no taxes will have to be paid on them.

For practical purposes, this affects the first, second and third prizes, which are those that exceed 40,000 euros. Those who take one of them will have to pay the following taxes:

First prize: 72,000 euros Second prize: 17,000 euros Third prize: 2,000 euros

Is there a legal way not to pay taxes on the Christmas Lottery? The short answer is no. Whatever you do you will always end up paying taxes on that prize. What does exist is a trick to pay less taxes, although not at zero cost.

Secure the sayings to reduce taxes

It is easy that in recent days you have seen headlines with the legal trick to avoid paying taxes on the lottery. It is a truth in measures. With this trick, the Treasury will not keep 20% of the Lottery prize, but you will pay taxes because the taxes will end up paying, just less and in a different way.

And what is that trick? Take out insurance for the tenth like the one offered by Laguinda. This policy does not guarantee that you will win. It is responsible for returning the 20% of taxes that the Treasury keeps.

The operation is simple. Imagine that you win El Gordo and his 400,000 euros. The process to collect the prize will be the same as if you did not have insurance. Namely, you can collect it from a collaborating financial institution that will directly subtract 20% taxes. Thus, the Treasury will keep 72,000 euros and your account will receive the remaining 328,000 euros.

At that moment is when the insurance is activated, which will pay you the 72,000 euros that you have paid to the Treasury. However, you will also have to pay taxes on that money.

Taxes on insurance money

The insurance company’s payment is not exempt from personal income tax. That is why it cannot be said that this trick serves to avoid paying taxes. What it does achieve is that the amount is lower.

The insurance money on the tenth is taxed as a capital gain that is taxed on the general basis, so you will pay more or less taxes depending on the rest of your income.

So that you understand it better, those 72,000 euros of the first prize will be added to your salary when it comes to paying personal income tax and you will pay taxes according to the income brackets, which are as follows:

Up to 12,450 euros: 19%.From 12,451 to 20,200 euros: 24%.From 20,200 to 35,200 euros: 30%.From 35,200 to 60,000 euros: 37%.From 60,000 to 300.00 euros: 45%.More than 300,000 euros : 47%.

How much do you actually save?

The cost of the insurance is 3 euros, which is paid depending on the tenth or not. If you are successful, the normal thing is that the tenth tax ranges between 30% and 45% depending on the rest of the income.

For example, a taxpayer with a tax base of 30,000 euros who will win the first prize will add 72,000 euros to that figure and bring his income up to 102,000 euros.

Of these 72,000 euros, 5,200 will be taxed at 30%; 24,800 euros will do it at 37% and finally the remaining 42,000 will do it at 45%. In total, the taxes for the lottery will be 48,536 euros instead of the 72,000 euros that would have been paid without the insurance.

In this sense, the lower the winner’s income, the less taxes will be paid on the prize using the insurance.