Winning a lottery, new smartphone for winning a competition, or a car received in a raffle is a nice bonus. However, such income is subject to taxation.

Tax Code of Ukraine includes winnings and prizes as taxable income of individuals. In most cases, it is not needed to pay the tax and levy yourself.

If the one won money in a lottery, the operator of lottery acts as a tax agent. It is the agent who calculates, withholds and transfers to the budget personal income tax at the 18% rate and the military levy at the 5% rate of the amount of payment of the specified funds at the expense of individual, regardless of the payment form and method of such funds. 

Also, calculating income in the form of winnings received during competitions, advertising campaigns, raffles and other promotional events, the tax agent is the organizer of the campaign, who independently withholds personal income tax and military levy and transfers them to the budget.

Example

If you won 10 thousand UAH in a promotional campaign, the organizer will deduct 1 800 UAH (18%) of the personal income tax and 500 UAH (5%) of military levy from this amount and transfer them to the budget. The winner will receive amount after the tax and levy are deducted.

Special attention should be paid to the non-cash prizes. If the winner receives a smartphone, household appliances, tourist trip or a car, cost of such prize is taxable. In this case, special coefficient determined by the Tax Code of Ukraine is used to calculate the tax.

Therefore, regardless of whether you received cash prize or valuable gift, such income is subject to taxation. At the same time, the obligation to calculate and pay tax and levy usually falls on the organizer of the winning or lottery operator.