How Danish prize tax works
When a business in Denmark runs a free competition that is open to everyone, and chance decides the winner, it pays a prize tax called gevinstafgift. The rules are in section 15 of the Danish Gaming Duties Act (lov om afgifter af spil):
- The rate is 17.5%.
- For cash prizes, the tax is on the part of the amount above 200 kr.
- For other prizes, such as goods, trips and experiences, the tax is on the part of the retail value above 750 kr.
- The tax is calculated for each prize on its own. Ten prizes worth 500 kr each are not added up to 5,000 kr.
The organiser pays the tax, not the winner. In return, the prize is tax-free for the winner.
Which competitions are covered
According to the Danish Tax Agency, three conditions must all be met:
- No stake. People don't pay to take part. A required purchase can count as a stake.
- Chance. The winner is found by chance, for example in a draw.
- Open to everyone. The competition is public.
Pure skill contests are not covered, and nor are competitions only for customers, staff or members. Different rules can apply to those, so ask your accountant.
How the value is set
For goods and experiences, the value is the retail price to a consumer, not what the prize cost you. You must be able to document or make the value probable, for example with your own shelf price. Gift cards follow the rule for cash at their face value, so the threshold is 200 kr. The tax is due on every prize above the threshold, even if the winner never collects it.
Example: one big prize or many small ones
Three ways to spend a prize budget of 15,000 kr on goods:
- 1 trip worth 15,000 kr: (15,000 − 750) × 17.5% = 2,493.75 kr in tax.
- 10 products worth 1,500 kr: (1,500 − 750) × 17.5% = 131.25 kr each, 1,312.50 kr in total.
- 30 products worth 500 kr: all under 750 kr, so 0 kr, and no registration.
The same budget gives a tax between 0 and almost 2,500 kr, depending on how you split the prizes.
Plan the prizes with the tax in mind
Many small prizes under the threshold suit instant-win games such as scratch cards and prize wheels, where many people win something. A main prize gets more attention, so put the tax in the budget from the start and register before the launch. Read about the two mechanics in instant win or prize draw, and what else to check in running online competitions in Denmark and the EU. Our guide to Danish prize tax goes through the rules in more detail.
In Scratcher, you set the quantity and the chance of winning for each prize under prizes and winners, and you can export winners and entries as documentation. Scratcher does not calculate or report the tax for you.
