17. März 2014
A German court has handed down a ruling on game show winnings tax. Where knowledge and skill are required to win a game show, as opposed to chance, the game show winnings can be considered income and may be taxed.
Taxes on game show winnings
The fourth chamber of the Münster Finance Court in Germany has handed down a judgment in favour of taxes on game show winnings (4 K 1215/12).
The case concerned the game show “The Farm”, which saw twelve candidates live together on a remote farm for up to seven weeks with no electricity or running water.
The participants had to feed themselves through planting crops and keeping livestock. Elimination games, including activities such as axe throwing or cow milking, were then used to determine who would leave the farm.
Game of chance
The winner of the TV show, “Die Farm” (The Farm) received the contractually agreed game show winnings, plus the weekly allowance amount to cover the duration for which the contestant was on the show.
The tax authorities treated the winnings not as game show winnings but as regular income and applied the relevant tax rate.
In court, the winner of the game show claimed, however, that the winnings were obtained through winning a game of chance which included regular elimination rounds and therefore should not be taxed as income.
Knowledge and skill
The finance court largely rejected this argument, adopting instead the view that the participant had received the game show winnings as consideration for participation, presence and the transfer of exploitation rights to the images and sounds.
In the court’s opinion, the game show winnings were also taxable, as they were won as a result of the participant applying skill and knowledge to out-playing other participants.
Source: press release Münster Finance Court from 17.02.2014
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