How are lottery winners taxed around the world?

The 0% tax rate that a person in Tra Vinh province who recently won 92.02 billion VND in the Vietlott lottery has to pay is significantly lower than the tax rates in the US and Europe.

managingThe daughter of a farmer in Tra Vinh is the real winner of the 92 billion VND lottery prize.

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The largest Powerball jackpot ever, worth $1.6 billion, was split among four winners in the US in January 2016. However, due to various taxes, the four winners will only be able to share just over $300 million.

The taxes applied to lottery winners in the US are the highest in the world.

According to CNBC's analysis, even before taxes, the prize value is already somewhat diminished. The jackpot winner will only receive the full $1.6 billion if they choose to receive the money in 30 installments over 29 years. If they decide to receive the entire amount at once, the prize value will be reduced by 38%, leaving only $930 million. After that, they will be subject to federal taxes, with the highest tax rate being 39.6%.

According to Melissa Labant, Director of the American Institute of Certified Public Accountants, lottery winnings are taxed much more heavily than winners realize. "There aren't many ways to avoid taxes when you win the lottery. Lottery winners aren't the kind of people the U.S. government wants to exempt from taxes," Labant stated.

For those who are citizens or residents with a Social Security number, the government automatically charges an additional 25% when receiving a lump-sum prize. This fee amounts to approximately $232.2 million. If the winner does not have Social Security, this fee increases to 28 to 30%.

That doesn't even include the 14.6% personal income tax that the winner had to pay to the tax authorities during the April 2017 tax season. This tax amounted to $135.8 million. Therefore, after deducting all taxes and fees, the winner is estimated to have approximately $561.7 million left. In reality, the prize is only $327.8 million before federal taxes – significantly less than initially predicted.

In Europe, most countries do not tax lottery winnings. According to the EuroMillions website, which is played in 13 European countries, only three countries – Switzerland, Spain, and Portugal – levy taxes on lottery income. Meanwhile, many people have become millionaires thanks to winning the jackpot and not paying taxes in France, England, Ireland, Austria, and Germany.

The EuroMillions lottery only allows the jackpot to accumulate up to a maximum of €190 million. The jackpot has been won twice, in 2012 in the UK and in 2014 in Portugal. However, the anonymous winner in Portugal was taxed 20%, so the British couple Adrian and Gilian Bayford still hold the record for the most valuable lottery jackpot in Europe.

However, England has a very high inheritance tax. Once a winner receives the prize money, it is automatically considered their property and is subject to a 40% inheritance tax on assets over £325,000. If the winner gives the money to someone else, they will be subject to a variable inheritance tax rate, which is 20% if the giver dies 3-4 years after the gift and 0% if the giver dies within 4-5 years.

In Vietnam, the Vietnam Lottery Company (Vietlott) has identified a person in Tra Vinh province who won the jackpot of 92.02 billion VND. However, according to current personal income tax regulations, this person must pay the entire prize money exceeding 10 million VND multiplied by a tax rate of 10%, equivalent to 9.202 billion VND. Thus, Vietnam is among the countries with relatively low lottery prize taxes and also does not levy inheritance tax when transferring assets between family members.

According to VOV