Income Tax: how to declare lottery prize and bet – 05/08/2023 – Market

A bet made on Pedro Leopoldo (MG) was the only one to hit the Mega-Sena on Saturday (April 29) and won a prize of R$ 61.05 million. However, the owner of this bet could have won R$ 87.22 million if it weren’t for the 30% of the Income Tax that was withheld at source, that is more than R$ 26.16 million of the main prize given by Caixa Econômica Federal.

As the BRL 26.16 million are already withheld, the winner of the Mega-Sena will need to declare the BRL 61.05 million earned in the 2024 declaration, which will refer to the 2023 transaction, but will not pay any more taxes. This is the situation of those who win lottery prizes from Caixa, which already discloses the amounts paid with the IR discount.

However, not all prizes distributed in raffles, bingos, contests or betting sites have this automatic taxation. And all must be declared in the Income Tax if the taxpayer is among the people required to report to the Federal Revenue Service.

To report the award to the tax authorities, citizens need to be aware of whether the person responsible for the payment is a legal entity or individual, and whether the company is domiciled in Brazil or abroad.

How to declare award received from legal entity?

If the prizes are received from a legal entity, as is the case with lotteries organized by Caixa, the value must be declared as follows in the Income Tax:

• In “Declaration Sheets”, click on “Income Subject to Exclusive/Definitive Taxation”, go to “New” and select income type 12 (Others)

• Inform whether the prize belongs to the holder or dependent, the name and CNPJ of the organizer of the lottery, raffle, bingo, contest or betting site.

• In the case of Caixa premiums, put Caixa Econômica Federal in the name of the paying source and put the institution’s CNPJ, which is 00.360.305/0001-04

• In Description, write that it was an amount won in a lottery, raffle, contest, bingo, etc. Fill in the net amount received and click OK

If the Caixa lottery prize was won in a syndicate, the taxpayer only needs to inform the amount received, and not the total amount that was apportioned among the participants.

“The lottery company asks you to inform when it is a lottery and gives a voucher for each quota. Thus, each participant withdraws only their share, as each one has their voucher”, explains Eduardo Marciano, Income Tax specialist at King Contabilidade.

For example, if you participated in a lottery with ten people, who won R$ 100 million from the Mega-Sena —with income tax already deducted—, you will receive R$ 10 million and will declare this amount to the IRS. The other nine winners will also have to inform the same BRL 10 million in their respective declarations.

If the organizer has not informed the lottery that it was a sweepstakes and he received the prize to later share with the other winners, he must inform the total amount in “Income subject to Exclusive/Definitive Taxation”.

Then, the organizer will have to inform in “Payments Made”, in code 99 (Others), the name and CPF of each of the winners. It is necessary to open a file for each participant, putting the value that each one received.

“In addition, in the “Description” field, provide a brief account of the fact, such as transferring a joint bet in a lottery”, explains David Soares, IOB consultant.

Participants in this sweepstakes must open the form under “Exempt and Non-Taxable Income”, enter the code 99 (Others), the name and CPF of the sweepstakes organizer, include the amount received and inform in the description that it was a receipt of joint lottery bet.

In the case of bingos, contests, raffles and betting sites, the person responsible for the prize is the one who will have to collect the Income Tax to be paid. “The winner has to ask for the income statement for that payment to put in the declaration”, says Eduardo Marciano. As in the Caixa lottery, 30% of the amount is retained by the Federal Revenue Service.

How to declare a prize received from an individual?

If the bingo, raffle or contest is not carried out by a company or entity that has a CNPJ, the tax will be collected by the person who organized the prize. In this case, she will have to pay the Carnê-Leão.

“Whoever organizes it is responsible for collecting the tax. Therefore, whoever wins just needs to declare that they received the amount without worrying about taxation”, explains Charles Goularte, vice president of operations at Contabilizei.

• In “Declaration Sheets”, click on “Income Subject to Exclusive/Definitive Taxation”, go to “New” and select income type 12 (Others)

• Inform whether the prize belongs to the holder or dependent, the name and CPF of the organizer of the raffle, bingo or contest.

• In Description, write that it was an amount won in a raffle, contest or bingo. Fill in the net amount received and click OK

How to declare a good received in a raffle, raffle, bingo or betting site?

If the prize received was an asset, such as a car or property, the winner must declare receipt under “Income Subject to Exclusive/Definitive Taxation”, as explained above, but in the description must include the data of the asset and inform that the prize was received in a sweepstakes, contest or raffle. The value must be informed in the documentation received from the organizer.

Then, you need to open a file in “Assets and Rights” to add this asset to your assets in the declaration.

How to declare the car

• In “Declaration Sheets”, select “Assets and Rights” and click on “New”

• Select group 02 (Movable Goods) and code 01 (Land motor vehicle: truck, motorcycle, car, etc.) and indicate the country of origin of the vehicle. Filling out the Renavam is not mandatory, but it is recommended by experts

• In “Discrimination”, inform the make, model and license plate of the vehicle, date received, name and CPF or CNPJ of the seller and state that the car was a prize received in a contest, bingo, raffle, etc. including the details of who organized the event.

• Leave the “Status on 12/31/2021” blank and enter the purchase price described in the documentation under “Status on 12/31/2022”

How to declare the property

• In “Assets and Rights”, select group 01 (Real Estate), choose the code that fits the property (house, apartment, building, shed, land, etc.) and define its location (Brazil or abroad)

• Fill in the data with the IPTU number (if the number is greater than 30 characters, put it in discrimination), date of acquisition, address, number, complement, neighborhood, city, state, zip code, total area in m² or hectares, number of property registration and notary

• In discrimination, state that the property was a prize received in a contest, bingo, raffle, etc., informing the data of who organized the event

• Leave the “Situation on 12/31/2021” field blank. In “Situation of 12/31/2022”, enter the value that appears in the property documentation

“The prizes received in goods or rights, through contests and raffles of any kind, are subject to the incidence of Income Tax exclusively at source, at the rate of 20%”, explains David Soares. However, this tribute is paid by the award organizer.

How to declare amount received from betting site abroad?

Online bookmakers have gained strength in recent years in Brazil and winners need to know if they are domiciled in the country in order to correctly declare the Income Tax, if the taxpayer meets one of the necessary requirements for the declaration.

“If they are headquartered in Brazil, the declaration is the same as if it were from the lottery [citada acima]. Bookmakers must have CNPJ and they make the taxable payment of IR”, explains tax lawyer Jonathas Lisse, and it is necessary to make a separate form for each betting site.

However, if the bookmakers are based abroad, the way to declare is different. The taxpayer will have to add up the amounts he received in the month from all the sites. If the total amount received exceeds R$ 1,903.98, the taxpayer will have to pay the carne-leão, following the monthly progressive table.

See the 2022 Income Tax table

Calculation basis	Aliquot	Installment to be deducted from the IRPF
Up to BRL 1,903.98	Free	Free
From BRL 1,903.99 to BRL 2,826.65	7.5%	BRL 142.80
From BRL 2,826.66 to BRL 3,751.05	15%	BRL 354.80
From BRL 3,751.06 to BRL 4,664.68	22.5%	BRL 636.13
Over BRL 4,664.68	27.5%	BRL 869.36

_{Source: Federal Revenue}

The taxpayer needs to enter the Revenue e-CAC (Virtual Service Center) and go to “My Income Tax”. Then, go to “Access Carnê-Leão”, fill in the requested information, issue the Darf (Federal Revenue Collection Documentation), with code 0190, and pay the amount by the last working day of the month following the amount received .

If there is a delay, a fine of 0.33% per day is charged, limited to 20% in the month, plus 1% interest for the month of payment and the addition of the Selic rate (Special System for Settlement and Custody). The Revenue provides Sicalc (Legal Additions Calculation System), which automatically makes the calculation.

After this procedure, the taxpayer must report these gains to the Revenue, following the step by step below.

• Go to “Declaration Sheets”, select “Taxable Income Received from Individuals/Abroad” and click on the “Other information” tab, specifying whether you are the holder or the dependent

• In the month in which the total amount received from the websites exceeded R$ 1,903.98, the taxpayer must inform the amount in “Income” in the “Exterior” column. For each month that the value was higher, it is necessary to inform. In the same month, he also needs to fill in the column “Darf paid code. 0190” in “Carnê-Leão”, with the amount paid in Darf for that month

• If the taxpayer has used the Carnê-Leão system, he has the option of clicking Import Data from Carnê-Leão, which will automatically bring the data