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V0289-22 15 February 2022 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · cifra de negocios

Payouts from betting do not reduce turnover, but are operating expenses

An online betting company asks whether prize payments to players should be deducted from turnover or recorded as an expense. The DGT states that, under accounting rules, prizes are not part of turnover but are necessary operating expenses of the business.

The question raised

1. Whether, from a tax perspective, the accounting registration criterion for prices paid to players, in accordance with the accounting regulations referenced in the presented background, is admissible, such that for the purposes of the INCN calculation, said amount is not included as a reduction in sales but as an operating expense.

The DGT's ruling

The net amount of turnover includes revenue from betting sales without deducting the amount of prizes awarded. Prizes are not negative components of turnover (such as returns or discounts), but rather a typical and necessary expense to obtain revenue. This criterion applies to both Corporate Income Tax and the exemption and weighting coefficient of the Business Activities Tax.

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