Won a prize in a lottery or contest — how much money you will actually receive
Receiving a cash prize in a lottery, a new smartphone for winning a contest, or even a car in a drawing — is always pleasant. However, tax consequences arise along with the prize. Ukrainian legislation provides that most winnings and prizes are taxable income for individuals. At the same time, in most cases, the winner does not need to calculate and pay taxes independently — this is done by the organizer of the drawing or the lottery operator.
Which winnings are subject to taxation
The Tax Code of Ukraine classifies winnings and prizes as taxable income of individuals. This rule applies both to cash payments and valuable gifts received during lotteries, contests, promotional campaigns, drawings, and other promotional events.
At the same time, in most cases, the winner does not need to pay the tax and military levy independently.
Who pays taxes on the winnings
If an individual wins money in a lottery, the tax agent is the lottery operator. They calculate, withhold, and transfer to the budget the personal income tax at a rate of 18% and the military levy at a rate of 5% from the amount of the winnings. These amounts are withheld from the individual regardless of the form and method of payment.
The same procedure applies to winnings received during contests, promotional campaigns, drawings, and other promotional events. In this case, the organizer of the event acts as the tax agent, independently withholding personal income tax and military levy and transferring them to the budget.
How much money the winner will receive
For example, if a winner of a promotional campaign wins 10,000 hryvnias, the organizer will withhold:
- 1,800 hryvnias of personal income tax (18%);
- 500 hryvnias of military levy (5%).
After that, the winner will receive the amount already minus these mandatory payments.
How non-cash prizes are taxed
Separate rules apply to non-cash winnings. If the winner receives, for example, a smartphone, household appliances, a tourist trip, or a car, the value of such a prize is subject to taxation.
To determine the tax amount in this case, a special coefficient provided by the Tax Code of Ukraine is applied.
What winners should remember
Tax authorities emphasize: regardless of whether a person received a prize in cash or as a valuable gift, such income is subject to taxation. At the same time, the obligation to calculate, withhold, and transfer personal income tax and military levy to the budget is usually assigned to the lottery operator or the organizer of the contest, promotional campaign, or drawing. Thanks to this, in most cases, the winner does not need to perform these tax procedures independently.
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