121. TAX SPECIALIST?

If someone had told me that supporting and travelling with my tennis playing daughter meant that I was going to have to become a “specialist” in foreign tax, I would have run a mile, but it turns out that if your player wants to maximise the amount of money she can earn then someone in the team needs to be able to navigate and understand the foreign tax situation!

As I detailed in my earlier blog, ‘Tax and the Tennis Player’, pro tennis players pay tax all over the world, in fact, in the majority of countries they compete in. There cannot be many professions that have to endure that. In fact, I can’t at this moment in time think of any other profession where an individual has to pay tax all over the world and is unable to claim the majority of it back. Please enlighten me if you are aware of one!

The amount of tax countries impose on prize money varies enormously as does the amount of tax that may be ‘withheld’. By that I mean, the amount of money some countries (for example, the USA and France) hold onto until it is has been proven that the player has not earned enough in in that country in that particular tax year to warrant that country keeping it. In other words, if your player does not earn over the basic income tax rate in a country that imposes withholding tax, then she may be able to claim at least some of this withheld tax back if she completes a tax return in that country. But, to do that, ie submit a tax return, costs money itself so the players have to decide if it is financially worthwhile paying someone to claim the tax back.

The amount of tax some countries deduct from pro tennis players prize money is much greater than many people outside of the game will realise. For example, Romania and Poland deduct a relatively small amount (10%) for non residents but at the other end of the scale, any prize money earned in countries such as Italy and the USA, a whopping 30% of the gross money earned is taken off non residents earnings before a penny is received. In some countries, such as Spain, the percentage rate varies according to whether or not you live in Europe or outside. So now that the UK is deemed to be outside of Europe, the British players get taxed 24% of their earnings; whereas pre Brexit this figure was a mere 19%.

Filing a tax return in a foreign country is no easy matter, especially if the country concerned does not have english as its primary language. Even if it does, the way in which tax returns are filed abroad can be very different from in the UK. For example, the tax year may be different – in the US the tax year runs from January to December. Similarly, the foreign country may or may not take into account income from things like sponsorship, even if received from a UK based company or a country far away from the tax office concerned . Yes you read that right, in France for example, the tax office asks for details of income earned not only in France but also abroad and they may allocate a percentage of this to the time spent competing in France. So if say, a player receives money for wearing a particular brand, then the French Tax Authority may include a percentage of that income within the French tax return for that player to account for time spent competing in France wearing that kit!

So if your player is looking to go pro, be prepared to enter the tax minefield as foreign tax is just one of the challenges that has to be addressed. There are many other issues that arise that have to be considered but tax is by far the most complex and frustrating one for all concerned! #realitytennis

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