Winnings from Online Poker Play May Also be Subject to Income Tax

July 10, 2023 | Tax

Press release from the Federal Fiscal Court of June 29, 2023 – number 031/23

München, Germany (July 3, 2023) — The Federal Fiscal Court (BFH) ruled on February 22, 2023 – XR 8/21 that winnings from online poker games can also be subject to income tax as income from commercial operations.

In the underlying case, a math student started playing online poker in the “Texas Hold’em/Fixed Limit” variant in 2007. Starting with initially small stakes and winnings, he gradually increased his stakes. His profits also increased significantly over time. In 2009, the year of the dispute, he already made a profit of over €80,000 from the online poker game, which continued to rise in the years that followed. In the period from July to December 2009 alone, his total registered playing time was 673 hours.

The finance court, as the factual instance, assessed the facts to the effect that the plaintiff had been commercially active from October 2009 and that the profit of a good €60,000 made in the months of October to December 2009 was therefore subject to income tax.

The BFH has confirmed this. In doing so, he followed up on earlier decisions about playing poker in the form of face-to-face tournaments and in casinos. According to this, poker is not a pure game of chance in terms of income tax law, but is also characterized by elements of skill. This also applies to online poker, even if personal contact with fellow players is not possible there.

However, according to the case law of the BFH – regardless of the form of poker game – not every poker player is subject to income tax. For recreational and hobby players, it is still a private activity in which profits – and losses – have no tax implications. However, if the scope of a private hobby activity is exceeded and the player is no longer concerned with satisfying his gaming needs but with generating income, his actions are to be regarded as commercial. The decisive factor is the structural comparability with a trader or professional player, eg the planned actions, the exploitation of a market or the extent of the money and time budget invested.

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