Sweepstakes for advertising or promotional purposes

Definition and main characteristics

1. A sweepstake for advertising or promotional purposes (hereinafter, CAFPP) is a type of draw that meets each of the following requirements:

a) Its purpose is to promote or publicise a product or service of any type.

b) The participant only has to use the product or service being advertised or promoted. That is, there is no other type of premium or specific pricing, beyond that derived from the consumption of the advertised or promoted product.

c) The draw in question is random.

d) As a result of the draw, the participant can obtain a prize, be it in cash, in kind, or a service.

2. Obtaining a licence or authorisation for a CAFPP is not required, nor is any prior notification of the Directorate-General for the Regulation of Gambling.

3. Should the draw not meet all the requirements set forth in section 1, either being a purely commercial or civil activity, or a gambling activity regulated under Law 13/2011, it could require specific authorisation from the Directorate-General for the Regulation of Gambling.

4. In any event, holding a CAFPP will additionally be subject to any applicable general rules of commercial and civil law, without prejudice to the specific tax treatment explained below.

Specific considerations on certain CAFPP

5.  When all participants in the draw obtain a prize and, in addition, it is identical for all of them, the randomness of the CAFPP is not required.  In this specific case, neither would there be a gambling activity subject to DGOJ authorisation and supervision as no element of chance exists.

6. When it is a jury that, prior to the activity, awards the prize, without there being any prior element of luck or chance, supplementary or subsequent to the decision or jury's opinion, the randomness required of the CAFPP does not exist.

Tax treatment

7. Natural and legal persons who run the CAFPP are subject to Gambling Tax, under the conditions and rate set forth in Law 13/2011.
The tax rate amounts to 10% of the total market value of the prizes offered or advantages granted to participants.

The management, collection, settlement and inspection of taxes corresponding to sweepstakes for advertising or promotional purposes is the responsibility of the State Tax Agency (AEAT).

For administrative tax settlement requests, the CAFPP’s organisers should contact any State Tax Agency office or branch.

The documentation required to settle the Tax on Gambling Activities will be the one set by the State Tax Agency. In any case, as a minimum, the identification of the natural or legal person subject to the tax as a taxpayer, a copy of the CAFPP's rules and the justification for determining the market value of the prizes offered or advantages granted is required.

Once notified of the administrative settlement made, the payment must be made in the manner and within the deadlines set by the State Tax Agency.

8. Winners of a prize resulting from participating in a CAFPP must declare such circumstance in their Personal Income Tax (IRPF) declaration.

Prizes from a CAFPP constitute an increase in wealth pursuant to current legislation on Personal Income Tax.

As a consequence of the foregoing, the organisers of the CAFPP will be obliged to apply the tax withholdings which correspond to the winners whenever the individual prices are worth more than €300.

More information on Raffles, occasional gambling and sweepstakes for advertising purposes