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Tax Variations Cost Millions in Income for Sportspeople Across the Globe

Tax Variations Cost Millions in Income for Sportspeople Across the Globe

Research released today by Taxand, the world's largest global organisation of tax advisors to multinational businesses, shows that sports stars across the world face significant discrepancies in income, potentially worth millions, depending on where they are resident, due to the varying tax regimes imposed in different countries.

Taxand's analysis compares net income for sportspeople across 17 countries, assuming a gross income of EUR3 million, and reveals that in the UK this salary would provide a net income of EUR1.5 million. In Switzerland this figure would result in take-home pay of almost EUR2.5 million, over 60% more per year, hence the moves to the region by a raft of F1 drivers including Fernando Alonso and Lewis Hamilton. Tax credits or tax benefits can vary greatly by jurisdiction and the results (shown below) exemplify how this can affect the sports profession.

The results also show an average net income across the globe of EUR1.97 million based on the EUR3 million salary, with some jurisdictions significantly in excess of, or below this figure. Alongside Switzerland, Brazil, China, Denmark and France all provide attractive tax breaks for sportspeople. In Belgium, the usual 50% income tax rate is lowered to just 18% for professionals in the sporting world.

The study shows the importance of considering tax legislation as players can end up earning a substantially different net amount depending on the tax regime of the country where they play. When receiving transfer offers from different clubs, players need to consider more than the base figures written on the contract.

Taxand's Global Guide to Tax for Sportspeople, issued today, gives an overview of the issues in 17 jurisdictions that influence personal income taxation, considering factors such as residency, taxation levels, specific sportspeople tax regimes and image rights licensing.

The guide also explores the variations between individual and team sports as well as the corporate income tax issues that can also come into play where companies, usually associated with image rights and sponsorship deals, are fully or partially owned by the sportsperson.

Felix Plaza Romero, of Taxand Spain, commented:

"Professional sportspeople are affected by a number of factors when deciding which club they sign for or which country to live in, These decisions are not confined to sporting or emotional factors and are influenced by issues such as personal taxation.

"Taxand's study shows that a sportsperson's net income can be dramatically changed by the tax rules in the country in which they play.

"A number of jurisdictions offer special tax regimes for sportspeople, acknowledging issues such as typically short career lengths. It is important that players fully understand and consider these rules when considering a move abroad."

To order a copy of the Taxand Global Guide to Tax for Sportspeople 2010 click here

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NOTES TO EDITORS

RESULTS

 

Country Gross Income (EUR) Max, Net Income (EUR)
Belgium 3,000,000 2,460,000
Brazil 3,000,000 2,175,000
China 3,000,000 1,671,042
Denmark 3,000,000 2,070,000
France 3,000,000 1,810,663
Germany 3,000,000 1,575,750
India 3,000,000 2,196,000
Italy 3,000,000 1,716,830
Luxembourg 3,000,000 1,841,133
Malta 3,000,000 1,956,755
Mexico 3,000,000 2,144,149
Portugal 3,000,000 1,747,192
Spain 3,000,000 2,280,000
Switzerland 3,000,000 2,460,000
The Netherlands 3,000,000 1,908,000
United Kingdom 3,000,000 1,526,976
United States 3,000,000 1,972,316

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

  • The results of the Taxand study assume that a player agreed to a gross salary
  • Where applicable, the results are calculated based on the special tax regime that applies to sportspeople in certain jurisdictions
  • The results assume the player is single and has no children
  • Taxand's Global Guide to Tax for Sportspeople can be ordered through the publishers, Thomson Reuters Aranzadi
  • This global Taxand guide was coordinated by Felix Plaza Romero and his team at Taxand Spain (Garrigues)

Your Taxand contact further queries is:
Abigail Tarren
T. +44 207 715 5243
E. atarren@taxand.com

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