[TimsterToo]

I live in the Netherlands and I'm hardly a tax expert here so I can't say anything about other countries.

Concerning the tax on illegal activities. In the Netherlands you can pay taxes over anything you earn money over and deduct the costs you make doing that. For instance there was a bit of an uproar over the income tax of a drugdealer (hard drugs not the often misunderstood coffeeshop situation) who deducted the cost of his pitbull terrier and his gun (all fire arms are illegal in Holland) from his income tax. The taxes will not report you to the police as they like you paying taxes. This doesn’t mean though that their money has been laundered and they can spend it on anything they like, the police will still take them down if they can’t proof that their too expensive car and too expensive house is not bought with money from non illegal activities. They just don’t get into tax trouble also. (I’m pretty sure they can also deduct the cost of laundering the money btw)

So a Dutch citizen would be better of paying taxes over illegal activities.

Poker specific, I’ve asked a tax inspector what their view on it was at the moment and he said that it’s a bit unclear if it isn’t your primary income as it depends on how poker is classified. (a gambling game, a game of skill etc etc) This is of course a specific Dutch issue as the taxes differ on pure luck games etc. Someone probably needs to go to court of this so we have an officlial ruling over this. If it is your primary source of income you should just treat it like you have a own business and pay normal income tax over it. So that would make things rather clear. He also told me that it would be best if I kept well documented records on my winning and losing and reserved an amount of my winnings to cover my ass in case they suddenly became very interested.

This was not an official conversation so he gave his professional opinion without putting it in writing or making statements I could hold him to. He did say that if he didn’t know about it, it wasn’t an issue yet. What he also added was that there’s a department of the taxes always looking into and monitoring new things as to determine the taxability of it. If poker was getting so big as I made believe it was he wouldn’t be surprised if they would take an official stance in the near future which would be inline with current tax laws and would be applicable from day one of online play, not from this day onwards. (hence his advice to make reservations)

That sounds logical to me and also something that all of us should reckon with, not just the Dutch players.

Lastly he said that if I win a couple of hundred $$ a year not to bother at all. If it becomes thousands the situation would change. I told him that I would hopefully need to reserve huge amounts in the future.

So document and reserve! The worst thing that can happen is that you actually have to use that reserve to pay taxes, otherwise you have savings. In any even you’ll better of than getting into huge financial problems with the tax department or have nothing to show for after playing poker for a couple of years.