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Poker player loses vital hand against tax man

The Local · 31 Oct 2012, 17:09

Published: 31 Oct 2012 17:09 GMT+01:00

Eduard Scharf appealed against the authorities taxing his winnings over the last few years, arguing that poker was a game of chance and as such was tax exempt in Germany. “Anyone can win a game of poker,” he said.

But the Cologne financial court ruled on Wednesday that he had to pay income tax on his winnings saying they counted as commercial income as they were linked to his personal skills.

He argued against this, saying that poker was largely a game of chance.

The tax authorities had said that only the winnings of hobby players could be tax free, and that Scharf had effectively maintained a business with his poker playing.

He had taken part in international tournaments – and won some – around the world, including Las Vegas.

He had invested large sums in registration fees and accommodation while playing, the authorities argued. They said that professional players used their analytical powers to reduce the role of chance in the game.

Scharf had played in casinos 81 times in 2008 alone, and had taken part in 19 international poker tournaments between 2003 and 2007. His success had secured him a job as commentator and advertising contracts, the authorities said.

Yet he argued that he was being forced to repay more than he had ever won, and that his losses playing poker had been even higher than his profits.

Story continues below…

Scharf has the option of appealing Wednesday’s decision but it remains to be seen whether he has any aces up his sleeve.

DAPD/The Local/hc

The Local (news@thelocal.de)

Your comments about this article

18:45 October 31, 2012 by lucksi
Hope he kept the receipts of him losing.

After all ,that should be tax-deductible then if the winnings are.
19:51 October 31, 2012 by ChrisRea
So does he claim that his winning are not taxable or that he does not have a profit? These are two different things.

Luck might have an impact on a poker game, but not necessarily. Champions can win also with a bad hand. While you cannot play roulette or lottery in a way that you are 100% sure to lose, you can do this with poker. That means that you have the option to play poker well. So I agree that it is a taxable income.
21:12 October 31, 2012 by Berlin fuer alles
I wonder what happens if he makes a loss. Can he use this as tax deductable against his profits from other months? I also agree that poker profits are taxable as it is income but this should also take into account his expenses such as travel, accomodation and the occasion that losses are incurred. If he is making an overall profit throughout the year as a professional poker player then it is a skill and not blind luck. Maybe he should set up an account in Switzerland and gamble on his data not being stolen for the German government.
22:07 October 31, 2012 by wood artist
In most states in the US, you can claim lottery losses against your winnings, but not to exceed what you won. In short, pure losing isn't deductible. I'm not certain that carries over into professional gambling. However, if you did create yourself as a "business" you could claim the related expenses, and that could result in a negative income. If there had been taxes withheld from your winnings you could get some of that back if it exceeds your tax obligation.

I have no idea how an "international gambler" would be treated, but that would also depend upon whether they were taxed by the country where they played.

wa
05:14 November 1, 2012 by charmjacket
Comment removed by The Local for breach of our terms.
00:08 November 2, 2012 by murka
If they claim that it is a business, the losses should be deductible from all his income.
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