How are lottery winners around the world taxed?

The 0% tax rate that a person in Tra Vinh province who just won a Vietlott lottery worth VND92.02 billion must pay is much lower than the tax rates in the US and Europe.

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The largest Powerball jackpot ever, worth $1.6 billion, was split between four winners in the US in January 2016. However, with a host of taxes, the four winners will only be able to split just over $300 million.

Taxes on lottery winners in the US are the highest in the world.

Even before taxes are applied, the prize has already been reduced somewhat, according to CNBC’s analysis. 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 take the lump sum, the prize will be cut by 38%, leaving them with $930 million. That person will then be subject to federal taxes, with the highest tax bracket being 39.6%.

According to Melissa Labant, director of the American Institute of Certified Public Accountants, lottery winnings are taxed at a much higher rate than winners think. "There are not many ways to avoid taxes when you win the lottery. Lottery winners are not the ones the U.S. government wants to exempt from taxes," said Labant.

For those who are citizens or permanent residents with a Social Security number, the government automatically collects an additional 25 percent when they claim the prize at once. That fee is equivalent to $232.2 million. If the winner does not have Social Security, the fee increases to 28 to 30 percent.

That’s not counting the 14.6% personal income tax that person will have to pay to the tax authorities in the April 2017 tax filing season. That’s equivalent to $135.8 million. So, after all taxes and fees are deducted, the winner is expected to be left with about $561.7 million. In fact, the prize is only $327.8 million before federal taxes — much lower than originally 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, collect income tax on lottery winnings. Meanwhile, many people have become millionaires thanks to winning the jackpot and paying no tax in France, the UK, Ireland, Austria and Germany.

The EuroMillions lottery only allows jackpots to be accumulated to a maximum of €190 million. The jackpot has been won twice, in 2012 in the UK and in 2014 in Portugal. However, anonymous winners in Portugal are taxed at 20%, so British couple Adrian and Gilian Bayford still hold the record for Europe's biggest lottery jackpot.

However, the UK has very high inheritance taxes. Once a winner receives the prize money, it is automatically considered their property and will be subject to inheritance tax at 40% on assets over £325,000. If the person gifts the money to someone else, they will be subject to a floating rate of inheritance tax, which is 20% if the donor dies within 3-4 years of the gift and 0% if the donor dies within 4-5 years.

In Vietnam, the Vietnam Computerized Lottery Company Vietlott has determined that a person in Tra Vinh province won the jackpot prize of VND92.02 billion. However, according to current Personal Income Tax regulations, this person must pay the entire winning amount exceeding VND10 million multiplied by the tax rate of 10%, equivalent to VND9.202 billion. Thus, Vietnam is among the countries that tax lottery prizes relatively low and at the same time do not collect inheritance tax when transferring assets between family members./.

According to VOV