Taxation of lotteries, competitions, games

In force until further notice


Lottery tax (in Finnish: Arpajaisvero; in Swedish: Lotteriskatt) concerns lotteries, competitions, games and similar events that are organized in Finland. It is payable to the Finnish state, and the taxable person is the operator or organizer. If several bodies or persons share the work related to the operation or organization, each one of them is responsible for ensuring that lottery tax be paid.

Pursuant to § 85, Income Tax Act, income arising from winning in a lottery can be exempt from income tax under the following conditions:

Exemption can be granted if income arises from winning in a lottery of an EEA country, operated by the rules of the national legislation of that country, or from a Finnish lottery conforming to the provisions of § 2, Act on Tax on Lottery Prizes. Nevertheless, any prize is taxable if it has or should have the characterization of a payment paid in exchange for goods or services, or if it has or should have the characterization of wages, under the rules governing tax withholding on wages paid out to employees and workers (Prepayment Act).

Events governed by Act on Tax on Lottery Prizes 

The concept of ’lottery’ (Finnish: arpajaiset; Swedish: lotteri) refers to cash competitions or sweepstakes, non-money lotteries where consumer goods are given out as prizes, guessing games, bingo games, 1x2 betting related to football, other betting and horse races, furthermore, the concept of ’lottery’ includes the operation of slot machines that may give cash or consumer goods as prizes, and the operation of gambling games in a casino establishment. Act on Tax on Lottery Prizes always concerns these, and any other events governed by Finnish legislation governing gaming activities. 

Furthermore, Act on Tax on Lottery Prizes also governs temporary, one-time public competitions or sweepstakes, guessing games, gambling, betting, and other comparable events where random results will determine who will win money in cash or as noncash benefits. Nevertheless, a prize is taxable under other tax laws if it has or should have the characterization of a payment paid in exchange for goods or services, or if it has or should have the characterization of wages, under the rules governing tax withholding on wages paid out to employees and workers (Prepayment Act). 
It is typical for many events that there is an entrance process: players cannot participate unless they fill out a questionnaire, answer a few questions, or walk through a commercial exhibition area. However, from the viewpoint of Act on Tax on Lottery Prizes, no importance is attached to the method of entrance. 

Act on Tax on Lottery Prizes will not be applicable unless the event concerned is based on random results, which determine who will win money in cash or as noncash benefits. 

Furthermore, Act on Tax on Lottery Prizes will not be applicable unless the event is effectively public. This means that the operator should impose no restrictions as to who can participate, and as to how many participants or players can be included. Furthermore, for a public event, the total number of participants should be relatively large -- in other words, several hundred participants is usually the minimum requirement. 

Prize may be taxable income for the winner

If the event is not operated in EEA countries, or if Act on Tax on Lottery Prizes does not apply to the prize, the winner must pay tax.

Income tax will also be levied on prizes won in quiz games, ice-fishing competitions and other comparable events where there is a skillful work effort, performance of an exploit, or a placing (such as first place, second place, or third place in a competition) that determines who will win money in cash or as noncash benefits. In these cases, the winner-beneficiary will have the obligation to include the income in his tax return. 

Correspondingly, the operator will have the information-reporting requirement to file an annual information return (on form 7801e, Annual information return summary and itemization), using code H4 as Type of Payment. 

Prize is taxable if:

  •  It has the characteristics of wages, paid for work or personal services 
  •  The payer is the winner’s employer 
  •  It is not based on chance, i.e. unsystematic or random outcomes
  •  It does not arise from an open, public event 
  •  It is based on a competition where best results are rewarded 
  •  It is won in a lottery operated outside European Economic Area.

If an employer has organized a drawing to randomly give out an international airline ticket as a prize to one of the workers, it will be taxable as wages in the hands of the winner. Similarly, any prizes arising from employer-organized selling competitions, marketing competitions, and similar events are taxable. 

Nevertheless, prizes from artists’ competitions are usually exempt, and so are the prizes won by schoolchildren in various school events or competitions.

Amounts and rates of lottery tax

Rates and tax bases

  • 10.0% on the operator’s gross profit in lotteries organized by one single operator. 
  • 9.5% on the operator’s gross profits derived from totalisator events.
  • 1.5% on the total sales of tickets in competitions or events where consumer goods are given out as prizes, and guessing games, organized by non-profit organizations, as defined by the provisions of the laws governing gaming, gambling and lotteries. 
  • 1.5% on the total incoming payments derived from keeping automated machines, giving consumer goods as prizes, available to the public.
  • 5.0% on the total value of winnings and prizes given out in a bingo game, not counting the prizes that entitle the player to a free repeat game. 
  • 30.0% on the total value of winnings and prizes given out in any other lottery/competition. 

Goods given out as prizes — non-money events 

Special rules apply to competitions where (consumer) goods are the prize, and that are based on drawings of chance or other random results. Instead of goods, these events sometimes involve giving out gift cards or free-purchase coupons to pay for goods. 

These types of events can only be organized by non-profit organizations under the rules of the legislation governing gaming, gambling and lotteries. Pursuant to § 27 of the act governing gaming, a school class, a club, or a group of co-workers can organize small events where goods can be given out as prizes. Nevertheless, if organized or operated by any other body, these events will fall into the category of other lottery/competition, and will thus be taxed at the 30-percent rate.

However, if total sales of tickets stays below €3,333.33, no lottery tax is payable.

Other events

Typical events that should be equated with lotteries and competitions are advertising-related sweepstakes or competitions for readers of newspapers and magazines. Restaurants and retail stores also organize competitions where a question is to be answered in writing, and the piece of paper with the answer and the participant’s name is submitted to the operator. In this case, lottery tax is 30% of the total value of the prizes awarded to the participants. However, if the total value of the prizes stays below €166.66 per calendar month, no lottery tax need be paid.

Taxpayers should compute their payable amounts of lottery tax with the accuracy of one cent, not round the amounts up or down. If the resulting sum does not reach the threshold of €50.00 per calendar month, it will be exempted.

Calculating ‘gross profit’

The gross profit serving as tax base is the difference between participants’ cash stakes and the total of winnings paid out. Nevertheless, in the case of non-money competitions or guessing games where goods are given as prizes, total sales of tickets i.e. total incoming amount of money will be the tax base. Similarly, in the case of automated machines giving consumer goods as prizes, tax base is the total incoming payments from machine users.

Valuation rules for prizes

If goods are given out as prizes, their value is the actual purchase price that was paid by the operator of the competition. This amount is the net price actually paid, after subtraction of any usual price discounts implemented. This value will thus include VAT, independent of whether the operator is entitled to deduct input VAT from his purchases (recent court ruling no KHO 2007:32). If operator received the goods for free, or if the purchase price cannot be determined for other reasons, fair market value of the prize will be the basis of the valuation rule for the prize. Fair market value means the probable selling price, if the operator had sold the goods instead of giving them out as prizes. So, fair market value is applicable in cases where a wholesale company or importer has sold the goods to the operator for a low price, or given them to the operator for free, seeking to improve product awareness. 

Payment and reporting of lottery tax

Lottery tax falls due on the 12th day of the second month following the event. This is the due date both for payment and for (electronic) submittal of Periodic tax return.

Periodic tax returns can be submitted electronically at (the interface only works in Finnish and Swedish).  If submitted electronically, Periodic tax returns are due on the 12th of the calendar month, however, if not submitted electronically, Periodic tax returns should arrive at the tax office on the 7th of the calendar month. Please be advised that Periodic tax returns cannot be sent by fax.

If the due date falls on a Saturday, Sunday or legal holiday, the last date of submittal will be the following weekday, which is not a Saturday, Sunday or legal holiday.

Calendar month regarded as the taxable period is:

  1. Revenue month under accounting rules, i.e. the month when accounting rules require that the income should be entered in accounting records;
  2. The closing month of a non-money competition/event;
  3. The calendar month during which a bingo game took place;
  4. The calendar month when winnings, as referred to in § 4.4 of the Act, have been ready for collection by the winning participant of the competition/event.

For precise information on deadlines and calendar dates, go to The Tax Account calendar gives details on:

  • Last filing dates of Periodic tax returns
  •  Due dates for payment of taxes.

For more information on official permits to organize lotteries, go to

The Tax Administration may contact the taxpayer to request more specific explanations or declarations. They may be necessary for control purposes, and taxpayers will have to submit the explanations or declarations on request.