Electronic sports are gaining in popularity, including a growing number of Polish e-sportsmen. Amateur or professional, they participate in domestic and foreign competitions, in which they achieve high results, including those that translate into measurable financial benefits. The revenue earned by such individuals is taxable. At the same time, the diversity and peculiarities of individual electronic competitions mean that – depending on their individual parameters – the revenue obtained from them may be taxed differently.
Taxation of income of e-sports players
Earnings from participation in e-sport is subject to income tax. In doing so, they may be subject to PIT in different ways:
- under the general rules, i.e. according to the tax scale,
- flat-rate income tax on winnings or prizes,
- registered lump sum,
- tax card,
- within the framework of an employment relationship, if the player earns income from e-sports under an employment contract.
Flat-rate PIT
Competition prizes may be subject to flat-rate income tax. According to Article 30(1)(2) of the PIT Law, income from winnings in competitions, games and pari-mutuel betting or prizes related to bonus sales, obtained in a member state of the European Union or another country of the European Economic Area, is subject to a flat-rate income tax of 10% of the prizes.
A taxpayer who is an individual and derives income from winning a competition on an individual basis (not resulting from the provision of services to another entity, such as under a civil law contract or employment contract) may tax it at a 10% flat income tax rate.
In this case, the PIT is settled by the payer acting as the agent, which is the organizer of the competition. He should calculate, collect and remit to the competent tax office the amount of lump-sum tax on the prize.
Individual tax ruling dated March 26, 2025.
The issue of taxation of we-sports earnings was resolved by the Director of the National Tax Information Service (KIS) in an individual tax ruling dated March 26, 2025, No. 0112-KDIL2-1.4011.110.2025.2.KF concerning a prize earned by a Polish individual from winning a competition held in the United Arab Emirates (UAE). The Director of the KIS indicated that the income of a Polish tax resident obtained in the UAE from e-sports races is taxable both in the UAE and in Poland.
In Poland, the prize in question should be taxed under Article 27(1) of the PIT Act, i.e. according to the scale. Since the race organizer, which is the source of the income, is based in the UAE (this country is therefore, in the opinion of the KIS Director, the place where the prize is obtained), i.e. in a country that is not a member of the EU or the EEA to which Article 30(1)(2) of the PIT Act providing for lump sum taxation refers to, the lump sum will not apply. According to the Director of the KIS, the taxpayer’s participation in the race from the territory of Poland is irrelevant.
Summary
Earnings of e-sports players are subject to taxation. In doing so, the taxation rules depend on various factors, in particular the qualification of the type of competition in question, as well as where the income is earned. Determining the correct taxation rules for prizes earned in electronic sports therefore requires analysis.
