Recent weeks have seen both the French and the Spanish Governments withdraw their sports-related tax breaks. The French have ended their “droit à l’image collectif”, which allowed football clubs to treat up to 30% of a player’s income as a payment for exploitation of their image rights rather than salary, and the Spanish have announced their intention to withdraw the so-called “Beckham tax” which permitted foreigners, including all soccer players earning over €600,000 per annum, to pay a 24% tax rate. Perhaps this puts the UK on a more level playing field in terms of attracting key sportspersons, albeit that we will soon have some of the highest personal income tax rates in Europe (which, as has been widely publicised, the football clubs are looking to mitigate since some players are insisting that the clubs, rather than the players, bear this additional tax burden).
In the UK, it remains possible for both footballers and clubs to separate remuneration received for services provided on the football pitch from income arising from the commercial exploitation of the footballer’s image rights. Where the footballer is domiciled in a country outside of the UK, the resulting tax savings can be material. This is, however, an area where we expect greater HMRC scutiny and so careful legal implementation of well thought-out and robust structures is crucial.