TAXATION OF SPORTSPERSONS IN SWITZERLAND
Some Key Issues
Apart from death, one of the certainties of life is tax and sport is no exception!
With so much money, especially prize money, available in elite sports, especially football, taxation is an important dimension and consideration in the practice of sport and the organisation of sports events, especially international ones.
Swiss and foreign sportspersons, who are domiciled in Switzerland, are liable to pay Swiss tax on their earnings from sport.
Even, if not domiciled in Switzerland, sportspersons may be liable to pay Swiss tax on their income, depending upon the particular circumstances.
However, Switzerland has entered into Double Taxation Agreements with various countries, including the United States and the United Kingdom, and, under those Agreements, the right to tax sportspersons, generally speaking, is granted to the country where the sport is played. This right to tax also applies to payments that are not made directly to sportspersons but to third parties. For example, to companies owned by sportspersons for tax sheltering their sports earnings, for example, from the commercialisation of their sports image rights.
Swiss domiciled athletes are subject to tax on their worldwide earnings. However, earnings, that are directly related to their sporting performances abroad, might be exempt, under the provisions of any applicable Double Taxation Agreements.
However, not all sportspersons’ earnings are subject to Swiss tax, but only earnings that are directly related to sportspersons’ physical performances or appearances in Switzerland. For example, prize money.
On the other hand, for example, regular salary and sponsorship payments or premiums for standings in the world rankings, which are paid independently of sports events held in Switzerland, are not, generally speaking, subject to tax in Switzerland. But particular circumstances may alter cases.
If sports’ earnings are taxable in Switzerland, the sports event organisers are responsible for declaring and deducting the withholding tax directly and paying it to the Swiss Tax Authorities.
It should be noted that sportspersons, who are resident abroad for tax purposes, may also become liable to pay value-added tax in Switzerland if they earn income in Switzerland and have a worldwide turnover of at least Sw. Frs. 100,000 per annum.
A simplified procedure, under which the value-added tax that may be payable, in such circumstances, and settled by the corresponding sports events’ organisers in Switzerland, may apply.
Sports events organisers in Switzerland may also be liable to tax on their income, unless they are exempt from Swiss tax as a not-for-profit foundation. Such foundations are exempt from value-added tax if they have a worldwide turnover of less than Sw. Frs. 250,000 per annum.
As will be appreciated, tax, especially where foreign elements are involved, is a complex matter and we advise sportspersons and sports events’ organisers on their basic tax liabilities in Switzerland.
In more complex tax cases, we draw on the advice and assistance of Swiss and foreign sports tax experts from our international network.
For further information and professional advice and assistance, email ‘info@valloni.ch’