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How the UK taxes overseas athletes and what the consequences are for UK sport

By Adam Thatcher published on 08 August 2014

At a media conference in March 2008, Michel Platini said, in response to why the lucrative 2010 Champions League Final was not awarded to Wembley Stadium in London, "Yes, the reason was the taxes"(specifically, the taxation of overseas footballers competing in the UK). Since then, income tax exemptions have been introduced by the UK Government to entice foreign sportsmen and women to train and compete in the UK.

For example, this was extended to non-UK resident athletes who recently competed at the Glasgow 2014 Commonwealth Games, reflecting similar exemptions put in place for the London 2012 Olympics and other major athletics events.

This article sets out the general rule regarding the taxation of non-UK resident sportspersons and examines some of the exemptions introduced.


General rule

Under Section 27 Income Tax (Earnings and Pensions) Act 2003,2 individuals that are not UK-resident are subject to UK income tax on their UK-based earnings. When duties are performed partly in the UK and partly overseas, an apportionment is required to determine how much of the earnings are in respect of UK duties. Such apportionment will essentially be a question of fact, according to the number of days worked in the UK and various other circumstances.3 Since April 2013, a statutory residence test is used to determine whether or not someone is resident in the UK and this considers UK workdays, family and other ties to the UK.4 HM Revenue & Customs has also launched an online tax residence indicator.5

In the context of overseas athletes, the general rule is that the number of days that a non-UK resident athlete spends training or competing in the UK in a year is apportioned on the basis of the proportion of events that the athlete trains and competes around the world. When calculating the number of training days, the sportsperson must undertake at least three hours of physical training to count towards the total.6 This follows from the landmark case in 2004 concerning Andre Agassi and HM Revenue & Customs (in which the latter was successful).7 UK-based earnings of overseas athletes typically include prize money and earnings from sponsorship deals.

This general rule is subject to exemptions, which have been introduced by the UK Government as a way of encouraging foreign athletes to compete and train in the UK, examined in the context of football and athletics.


2010 Champions League Final

In March 2008, Wembley Stadium lost its bid to host the 2010 Champions League Final to Real Madrid's Estadio Santiago Bernabéu Stadium.8 Although UEFA acknowledged Wembley's compelling bid, the stadium was discounted for failing to provide assurances that players competing in the final would not be subject to UK income tax.9 The general tax rule clearly worried UEFA.

The final eventually took place at the Bernabéu Stadium on 22 May 2010 with FC Internazionale Milano beating FC Bayern München 2-0 to lift the Champions League trophy.10 Had it taken place at Wembley, foreign players would have been subject to income tax of up to 50% (at the time) on their earnings during any training, other engagements and the match whilst in the UK.

2011 Champions League Final

The UK Government responded to Wembley's bid failure in March 2008 by agreeing, just two months later in May 2008, to relax tax charges on overseas footballers' earnings in preparation for a fresh bid for the 2011 Champions League Final. This "u-turn"11 was a "key part of the bidding process",12 which turned Wembley into a strong contender and duly paid off when, in January 2009, Wembley was chosen to host the 2011 final.13 Section 63 and Schedule 20 Finance Act 201014 were introduced, with paragraph 1 of Schedule 20 stating:

Schedule 20 (1) This paragraph applies if an employee or contractor of an overseas team which competes in the 2011 Champions League final ("the final") is neither UK resident nor ordinarily UK resident at the time of the final. (2) That person is not liable to income tax in respect of any income arising to the person which is related to duties or services performed by the person in the United Kingdom in connection with the final.

The 2011 final took place on 28 May 2011 when Manchester United were beaten by FC Barcelona 3-1.15 Without this specific tax exemption, it would have been virtually impossible for Uefa to agree to hold the final in the UK, particularly given that the top income tax rate at the time was 50%. From a UK perspective, the Office of Tax Simplification commented, "there is no tax loss, and this event is likely to bring significant additional revenues to the UK with over 50,000 additional visitors".16 In the end, it was estimated that the 2011 final yielded £45m for the London economy.17 This therefore represented a significant boost for the UK and rekindled demands from other international sports stars competing in the UK to be treated similarly.18

2013 Champions League Final

Wembley also successfully bid for the 2013 Champions League final.19 Similarly to the 2011 final, on 6 December 2011, the UK Government announced that legislation would be introduced to exempt money from UK taxation earned by non-UK resident footballers in relation to the 2013 final.20 Unlike in relation to the 2011 bid, this measure was also included in the 2012 Budget Red Book.21 Section 13 Finance Act 201222 was introduced, mirroring Schedule 20 Finance Act 2010, stating:

Section 13 (1) No liability to income tax arises in respect of any income from the 2013 Champions League final that arises to a person who is (a) an employee or contractor of an overseas team that competes in the final, and (b) non-UK resident at the time of the final.

The 2013 final was held on 25 May 2013 at Wembley, with FC Bayern München lifting the trophy after beating Borussia Dortmund 2-1 (going some way to addressing Bayern's disappointments in 2010 and 2012 in the competition).23


The UK Government also sought to address onerous tax rules on overseas athletes to replicate the exemptions provided for the London 2012 Olympics.24 Usain Bolt's decision not to run in the 2010 Diamond League event in Crystal Palace in London25 is likely to have influenced this move.

In February 2013, the Government announced that it would introduce an exemption from income tax on appearance fees, prize money and certain endorsement money for non-UK resident athletes competing at the London Anniversary Games held between 26 and 28 July 2013;26 this announcement was reiterated in the 2013 Budget in March 2013.27 Section 8 Finance Act 201328 stated:

Section 8(1) An accredited competitor who performs an Anniversary Games activity is not liable to income tax in respect of any income arising from the activity if the non-residence condition is met [i.e. non-UK resident for the tax year 2013-14 (Section 8(2)].

In terms of athletics this year, it was announced in the 2014 Budget that the same exemption would apply to the Glasgow Grand Prix, which took place 5 and 14 July 2014.29 Section 47 Finance Act 201430 was introduced, mirroring Section 8 Finance Act 2013 above. In addition, as announced in the 2013 Budget, overseas athletes who competed in the Glasgow 2014 Commonwealth Games between 23 July and 3 August 2014 benefited from a similar exemption to UK income tax pursuant to Section 9 Finance Act 2013.31 Although many high profile athletes did not compete at the games, at least this was not due to the tax regime, instead the majority due to unfortunate injuries.

Why is it important?

The taxation of major sports events is important because if there is no tax exemption, bids for major sporting events are less likely to be successful and overseas sport stars are less inclined to compete in the UK. For example, in 2010, Bolt refused to compete at the Crystal Palace Grand Prix32 and later said, "As soon as the law changes I'll be here all the time".33 In 2012, Rafael Nadal refused to play at the Aegon Championship at Queen's Club,34 citing concerns over paying UK tax on endorsement income from his sponsors. There were also concerns from European Tour golf officials regarding the Ryder Cup, held at Celtic Manor in Wales in 2010, since non-UK players "would be harder hit since they receive no prize money from the event".35 As was evident in Wembley's Champions League Final bids, without the tax exemption the bid failed which was dramatic considering that many regard the competition as the "pinnacle of club football".36

Major sport events involve vast amount of contracts generating considerable amounts of money. Logically, it is clear that when sport stars do not compete, broadcasting, sponsorship and merchandising revenues and the local economy will be negatively affected. For example, the direct economic impact on London of the London Anniversary Games was £15.2m.37 Catherine McKinnell MP highlighted this issue during the debates on the Finance Bill 2014 provisions:

"The current situation has led to growing concerns that the UK may be seen to be closed to sport, thereby deterring organisers from considering the UK as a location for their event, and prompting sportsmen and women to question whether participation in an event staged in the UK should be included in their schedule."38

David Gauke, the Exchequer Secretary, said the aim behind the tax exemption was to attract "highly mobile individuals who have choices about where they locate".39 Tax has become a big factor for overseas sports stars, therefore these measures are crucial to attract the very best.

New power

Catherine McKinnell, whilst acknowledging the positive features of the exemptions, highlighted that "tax exemptions for sporting events have been dealt with on an ad hoc basis in Finance Bill to Finance Bill".40 To address this piecemeal approach, going forward, a power has been included in Section 48 Finance Act 2014 to make it easier to implement tax exemptions for future sporting events, specifically by allowing the UK Government to make secondary legislation for income tax and corporation tax exemptions for major sporting events.

Foreign tax regimes

International sport involves sportsmen and women from many different jurisdictions competing around the world. Each jurisdiction inevitably has its own unique tax regime and its own network of exemptions. In order to prevent excessive (or 'double') taxation for internationally mobile people, Double Taxation Treaties are agreed between jurisdictions to govern how an individual will be taxed. There are over 3,000 treaties world-wide41 and they are often based on the OECD Model Tax Convention on Income and Capital (the “OECD Model”).42 Pursuant to Article 17 of the OECD Model, income earned by a sportsman resident of one country (e.g. the US) from activities exercised in another country (e.g. the UK) may be taxed in that other country (i.e. the UK). The taxation of international sportsmen and women therefore generally depends on the domestic rules, in particular the rate of income tax and the extent of any exemptions.43 For example, in the US, non-US resident athletes must pay US income tax on US source income. Special US tax and withholding rules apply to such athletes.44


It is important for UK sport and the local economy that the UK Government continues to support and encourage foreign athletes to compete in the UK through the use of income tax exemptions for winnings and endorsement income. This is particularly important in order to promote the London 2012 Olympics legacy and following the success from Champions League Finals over the past few years and to retain the UK's image of being a centre for global sport.

It is unfortunate, and to some extent embarrassing for the host country, when athletes put their absences from major events down to the way their earnings and sponsorship money will be taxed, as opposed to injury or other commitments. Tax has become a key issue within the last 10 years, as a reflected by the negative press preceding the swell of exemptions, and this is probably due to the commercialisation of sport and the sums involved. The new power in Finance Act 2014 is therefore to be welcomed in making it easier to cater for foreign athletes to avoid the situation that often existed prior to the London 2012 Olympics.

According to the Explanatory Notes to Finance Bill 2014,45 the Government's policy is "to grant certain tax exemptions for sporting events if the event is: world-class, internationally mobile, and where exemption by the host country is a requirement of a bid to host the event".46 Consequently, it is up to the event organisers to convince HM Revenue & Customs that an exemption is justified. It may be surprising that the 2015 Rugby World Cup, taking place in the UK between 18 September and 31 October 2015, will not receive a similar tax break to athletics and football.47 It was reported that this is because the International Rugby Board did not feel that the exemption was necessary for the UK's bid (they did not make any request to the Department of Culture, Media and Sport).48 Although this is unfortunate for overseas rugby players, the bid was successful nevertheless and this is the most important thing.


1. Mark Ledsom, 'Madrid to host 2010 Champions League Final', Reuters, 28 March 2008, http://uk.reuters.com/article/2008/03/28/uk-soccer-uefa-finals-idUKL2890831620080328

2. Income Tax (Earnings and Pensions) Act 2003, http://www.legislation.gov.uk/ukpga/2003/1/contents

3. HM Revenue & Customs, Employment Income Manual, Statement of Practice 1/09

4. 'Statutory Residence Test Flowchart', KPMG, 2013, http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Documents/PDF/Tax/220515_SRT_Flowchart_FB_21May_acc.pdf

5. 'Check your residence status', HM Revenue & Customs, http://tools.hmrc.gov.uk/rift/screen/SRT+-+Combined/en-GB/summary?user=guest

6. Hedley, Hackleton and Watkins, 'Sporting Chance' (2013) Taxation Magazine, 16 May 2013

7.Agassi v Robinson [2006] STC 1056

8. Mark Ledsom, 'Madrid to host 2010 Champions League Final', Reuters, 28 March 2008, http://uk.reuters.com/article/2008/03/28/uk-soccer-uefa-finals-idUKL2890831620080328

9. 'Wembley loses 2010 final over tax', BBC online, 28 March 2008, http://news.bbc.co.uk/sport1/hi/football/europe/7319045.stm

10. Andrew Haslam, 'Milito ends Inter's long wait', Uefa Match Report, 22 May 2010, http://www.uefa.com/uefachampionsleague/season=2010/matches/round=2000032/match=2000488/postmatch/report/index.html

11. 'Tax break aids Wembley 2011 bid', BBC online, 13 May 2008, http://news.bbc.co.uk/sport1/hi/football/7397206.stm

12. 'Review of tax reliefs' Final Report, Office of Tax Simplification, March 2011, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/198570/ots_review_tax_reliefs_final_report.pdf

13. 'FA delighted as Wembley to host 2011 Champions League final', The Guardian online, 29 January 2009, http://www.theguardian.com/football/2009/jan/29/wembley-stadium-host-champions-league-final

14. Finance Act 2010, http://www.legislation.gov.uk/ukpga/2010/13/contents

15. Simon Hart, 'Barcelona crowned as Messi and Villa see off United', Uefa Match Report, 28 May 2011, http://www.uefa.com/uefachampionsleague/season=2011/matches/round=2000122/match=2003352/postmatch/report/index.html

16. 'Review of tax reliefs' Final Report, Office of Tax Simplification, March 2011, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/198570/ots_review_tax_reliefs_final_report.pdf

17. Hansard, Commons Debates, Public Bill Committee Debates, Finance (No. 2) Bill, 8 May 2014, Catherine McKinnell MP, Column 242, http://www.publications.parliament.uk/pa/cm201314/cmpublic/finance/140508/pm/140508s01.htm#14050891000261

18. Roger Blitz, 'Football tax break kicks up a storm', The FT, 25 March 2010

19. Wembley Stadium, 'Wembley to host Champions League Final in the FA's 150th year', The FA.com, 16 June 2011, http://www.wembleystadium.com/Press/Press-Releases/2011/6/Champions-League-2013.aspx

20. 'Overview of Legislation in Draft', Overview of Measures, HM Revenue & Customs and HM Treasury, 6 December 2011, para 2.17, http://www.hmrc.gov.uk/budget-updates/06dec11/old.pdf

21. 'Budget 2012', Budget policy decisions, HM Treasury, March 2012, para 2.58

22. Finance Act 2012, http://www.legislation.gov.uk/ukpga/2012/14/contents/enacted

23. Andrew Haslam, 'Robben ends Bayern's run of final misery', Uefa Match Report, 25 May 2013, http://www.uefa.com/uefachampionsleague/season=2013/matches/round=2000351/match=2009612/postmatch/report/

24. London Olympic Games and Paralympic Games Tax Regulations 2010, section 3 – 'Exemption from income tax etc', http://www.legislation.gov.uk/uksi/2010/2913/contents/made

25. 'Usain Bolt snubs London meeting over tax laws', BBC online, 12 July 2010, http://news.bbc.co.uk/sport1/hi/athletics/8812123.stm

26. 'Promoting London 2012 Legacy – British Athletics London Anniversary Games', HM Treasury News, 15 February 2013, https://www.gov.uk/government/news/statement-regarding-the-london-anniversary-games

27. 'Overview of Tax Legislation and Rates', HM Revenue & Customs and HM Treasury, 20 March 2013, Annex A – Tax Information and Impact Note A17

28. Finance Act 2013, http://www.legislation.gov.uk/ukpga/2013/29/contents

29. 'Overview of Tax Legislation and Rates', HM Revenue & Customs and HM Treasury, 19 March 2014, Annex A – Tax Information and Impact Note A21, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/294190/OOTLAR_19_March_2014__1_.pdf

30. Finance Act 2014, http://www.legislation.gov.uk/ukpga/2014/26/contents/enacted

31. Glasgow 2014 XX Commonwealth Games, Media Centre, 'Glasgow 2014 gets tax boost', http://www.glasgow2014.com/media-centre/press-releases/glasgow-2014-gets-tax-boost

32. 'Usain Bolt snubs London meeting over tax laws', BBC online, 12 July 2010, http://news.bbc.co.uk/sport1/hi/athletics/8812123.stm

33. Andrew Trotman, 'Usain Bolt refuses to race in UK until tax laws are changed', The Telegraph online, 14 August 2012, http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9475125/Usain-Bolt-refuses-to-race-in-UK-until-tax-laws-are-changed.html

34. 'Tax change may lure Rafael Nadal back to Queens', BBC online, 21 March 2012, http://www.bbc.co.uk/sport/0/tennis/17469453

35. 'Euro Tour in talks with UK over taxes', 2010 Ryder Cup, ESPN online, 10 August 2010, http://sports.espn.go.com/golf/rydercup10/news/story?id=5451725

36. Stuart Hodge, 'The Champions League is the pinnacle of club football', Football Fancast online, 19 March 2011, http://www.footballfancast.com/football-blogs/the-uefa-champions-league-trophy-tour-arrives-in-bangkok-2

37. Hansard, Commons Debates, Public Bill Committee Debate, Finance (No. 2) Bill, 8 May 2014, David Gauke, Column 245, http://www.publications.parliament.uk/pa/cm201314/cmpublic/finance/140508/pm/140508s01.htm#14050891000261

38. Hansard, Commons Debates, Public Bill Committee Debate, Finance (No. 2) Bill, 8 May 2014, Catherine McKinnell MP, Column 238, http://www.publications.parliament.uk/pa/cm201314/cmpublic/finance/140508/pm/140508s01.htm#14050891000261

39. Ibid, David Gauke, MP, Column 245.

40. Hansard, Commons Debates, Public Bill Committee Debate, Finance (No. 2) Bill, 8 May 2014, Catherine McKinnell MP, Column 238, http://www.publications.parliament.uk/pa/cm201314/cmpublic/finance/140508/pm/140508s01.htm#14050891000261

41. HM Revenue & Customs, Double Taxation Treaties, The Library, http://www.hmrc.gov.uk/taxtreaties/dta.htm

42. OECD ‘Model Tax Convention on Income and on Capital’ 22 July 2010, http://www.keepeek.com/Digital-Asset-Management/oecd/taxation/model-tax-convention-on-income-and-on-capital-2010_9789264175181-en#page65

43. For further commentary, see Yazicioglu 'Specific Tax Exemption Regulations for Major Sports Events: Example of Olympic and Paralympic Games' (2012) 1-2 ISLJ 53

44. 'Taxation of Foreign Athletes and Entertainers', Inland Revenue Service, International Taxpayers, http://www.irs.gov/Individuals/International-Taxpayers/Taxation-of-Foreign-Athletes-and-Entertainers

45. 'Finance Bill 2014 Explanatory Notes', HM Treasury, Clause 45: Major Sporting Events: Power to Provide for Tax Exemptions, http://www.publications.parliament.uk/pa/bills/cbill/2013-2014/0190/en/14190envol1.pdf

46. Ibid, para 6

47. Gavin Mairs, 'World Cup 2015 will bring in £2bn, but there will ne no Usain Bolt tax break for the big stars', The Telegraph online, 25 March 2013, http://www.telegraph.co.uk/sport/rugbyunion/rugby-world-cup/9953435/World-Cup-2015-will-bring-in-2bn-but-there-will-ne-no-Usain-Bolt-tax-break-for-the-big-stars.html

48. Ibid



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About the Author

Adam Thatcher

Adam Thatcher

Adam Thatcher is an associate in the Corporate Technology team at Taylor Wessing LLP, having completed his training contract at Mayer Brown International LLP which included a secondment to a global insurance company.

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