The World Series of Poker (WSOP) Main Event just concluded last week, with Pius Heinz being crowned champion. For his extraordinary play, Heinz pulled in a massive $8.7 million. Hailing from Germany, a popular question has been just how much of these winnings will be taxed? According to Russ Fox of Clayton Financial and Tax, the answer is zero.
Fox’s analysis became popular when CNBC sports analyst Darren Rovell tweeted a link to the story. In his analysis, Fox broke down the tax liabilities of each of the November Nine. Heinz had the best deal of all, reaping the benefits of a U.S.-Germany tax treaty. Under this treaty, gambling income is exempt from all U.S. taxation. That got Heinz clear of the American tax, but what about in his native country? In Germany, gambling is defined as the usage of “after-tax money.” In other words, his gambling income is not taxed at all. Thanks to this law, $8,715,638 will find its way into the winner’s bank account.
In 2008, Main Event champion Peter Eastgate lost 75% of his winnings simply because he is a citizen of Denmark. Eastgate pulled in $9.1 million, but only was rewarded with a little under $3 million.
Out of all of the 2011 nine final table payouts, Fox’s analysis concluded that 18.91% was taxable income. This is a vast improvement over the 43 percent taken out of 2010’s final table. However, in 2010, every player was subject to taxation (unlike Heinz in 2011).