Spain to get bigger cut of 'El Gordo' lottery winnings

Lottery Administration owners and locals celebrate having sold a first prize ticket in Spain's Christmas lottery named "El Gordo" (Fat One) in Palencia on December 22, 2013.

Story highlights

  • Big winners in Spain's annual Christmas lottery will have to pay a 20% tax
  • The top El Gordo prize is worth $548,000 (400,000 euros)
  • The winner would have to pay $109,000 (80,000 euros) in taxes
  • The government started taxing all major lottery winnings in 2013

The "fat one" is about to get thinner.

For the first time, big winners in Spain's annual Christmas lottery will have to pay a 20% tax on their winnings if the prize is greater than 2,500 euros, or $3,425.

In Spain's deep economic crisis, the government started taxing all major lottery winnings in 2013 and expects to collect about $1 billion this year.

On Sunday alone, in the annual Christmas lottery that will pay out about $3 billion in prize money, the government anticipates collecting tens of millions of dollars in taxes, the Treasury Ministry told CNN.

Most of the prizes are relatively small, but the lucky ones holding part of the $875 million (640 million euro) first place prize, known as El Gordo -- "the fat one" -- will face the tax bite.

A $27.40 (20 euro) lottery ticket that matches all the numbers of the first place El Gordo prize would win $548,000 (400,000 euros), but the winner would have to pay $109,000 (80,000 euros) in taxes, the Treasury Ministry said.

Spaniards typically spend 20 euros or less to buy a share of a full ticket, trying to spread the purchase among friends or family, at the local bar or at the workplace.

    But Spain's economic crisis and unemployment rate, which still tops 25%, has not spared the lottery, whose intake has declined for five consecutive years, according to the Spanish Gaming Yearbook 2012-2013.

    The lottery officially began in 1892. Year after year, the biggest winner is the state, which keeps $1.3 billion -- or 30% -- of the entire lottery intake, which reached $4.3 billion this year. The remaining 70% is distributed for prizes.