As the April 30 income tax filing deadline approaches, here is some news from overseas which may well start a trend for other governments to follow in light of the ever growing popularity and importance of online poker. Online poker pros in Italy are being questioned by the Italian Revenue Agency and the Italian Finance Police to investigate income earned and declared by players who have signed sponsorship contracts with Italian and International online poker rooms.
Many of these players recently received letters along with a form questioning them about their winnings, sponsorships, foreign bank accounts and any incomes that they received from royalties and photo image rights resulting from their poker popularity. In Italy, any winnings from a site which does not have an establishment (or license) within the country are subject to income taxation. These players are required to fill out the forms and submit them back with all relevant information to their local tax office by a specified date.
In Italy, licensed poker rooms pay a hefty tax on the rake received from players, in fact it is the poker players who are charged part of the tax taken from their rake in the area of 13% compared to international poker sites that charge about 5% on average. The operators in Italy pay a 20% tax on gross profits earned from cash games and must work within a certain framework.
The foreign bank accounts will also be monitored for online gambling activity and if the balance or any fund movements exceeds €10,000 (~$14,000 CAD), the Italian government requires it to be declared as a financial asset that could produce foreign income which will then be taxed accordingly.
In Canada, professional poker players are generally required to report all revenues earned from playing poker as income. Some exceptions may apply such as whether or not the income earned from poker is their primary source of income. Unlike Italy, in Canada poker winnings even at a casino or the new government run online poker rooms are not tax-free unless of course these winnings are not considered the player’s primary profession.