U.K. Tax That Pushed Rafael Nadal to Germany Brings in $105 Million a Year


This article comes from “Bloomberg”

A U.K. tax on the earnings of foreign sports and entertainment figures working in the country, including two-time Wimbledon tennis champion Rafael Nadal, yielded 68 million pounds ($105 million) in 2009-2010.

The Foreign Entertainers Unit of Her Majesty’s Revenue & Customs collected 56 million pounds from the tax on endorsement income, appearance fees and revenue in 2008-2009, according to data obtained by Bloomberg News under a Freedom of Information Act request. That compared to 58 million pounds in 2007-2008.

Nadal last month said he won’t prepare for Wimbledon at the grass courts of the Queen’s Club in west London, instead opting to play in Halle, Germany in the same week in June. The Spaniard told reporters in Shanghai that he would “lose money” if he played Queen’s, where he competed in five of the past six years.

Jamaican sprinter Usain Bolt, the winner of three Olympic gold medals, last year avoided competing in London because of U.K. tax laws, while Spanish golfer Sergio Garcia limits his appearances to the British Open for the same reason. Team sports such as soccer are exempt and athletes competing in next year’s London Olympics will also avoid the duty.

According to a report by London-based accountancy and advisory firm RSM Tenon, HMRC collects about 7 million pounds a year from taxing global endorsement income of non-resident individual sports stars alone.

HMRC said it wasn’t able to provide a breakdown of the total sum collected across the different groups of individual athletes, models and actors.

Hosting Risk

O2 Arena

The U.K. may be at risk of losing future sports events including tennis’s ATP World Tour Finals, held this week at the O2 arena in London, tournament organizers and tax experts said.

“It’s not just about taxing players, it’s actually about keeping sustainable events in this country that support the grass-roots of all the sports,” Chris Kermode, tournament director at Queen’s, said in an interview.

Top-ranked Novak Djokovic plays his final group match at the ATP Finals today against Davis Cup teammate Janko Tipsarevic. Spain’s David Ferrer, who has already qualified for the semifinals after he beat Djokovic, faces Tomas Berdych of the Czech Republic in the evening session.

The ATP Finals may boost the U.K. economy by as much as 100 million pounds a year, according to a 2009 report commissioned by title sponsor Barclays Plc. The event is in the third year of a five-year contract in London. It has not been decided where the tournament, which brings together the top eight singles players and doubles pairs, will be held after that.

“I think the foreign entertainers unit feels that it has a job to do,” Freddie Huxtable, a specialist sports tax adviser at RSM Tenon, said in an interview. “But there is a bigger picture. Should we try to preserve our events, rather than lose key stars and players from particular events?”

Tax Changes

HMRC recently changed the way it calculates tax owed on the global endorsement income for overseas athletes and performers, Huxtable said. It now bases the tax on the number of U.K. events they participate in as a proportion of total events per year.

This means that if a professional runner competed in only two events per year, including the London marathon, he would be taxed on half his global endorsement income.

Nadal, who according to Forbes makes $20.5 million a year from nine endorsement contracts with companies including Nike Inc., played 20 events this year, including three in the U.K.

That means he will owe tax in the U.K. on 15 percent of his global endorsement income. By dropping Queen’s, the Spaniard lowers his tax rate to 10 percent. The top tax rate in the U.K. for high earners is 50 percent.

For the whole article – CLICK HERE

About these ads

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 39 other followers

%d bloggers like this: