British athletes’ gold medals could quickly lose their lustre if participants unknowingly become liable for French taxes on income generated from the sport. the OlympicsTax experts also warn.
Although athletes generally do not receive monetary prizes for their successes at the Games, French authorities can still tax income derived from other activities such as sponsorship and appearances at events while in the country.
Organizers of Paris The 2024 tournament has tried to pre-empt any friction by publishing a tax guide ahead of the Games outlining some of the considerations for sports stars and their teams. France For tax purposes, they are taxable in France exclusively on their French source income, subject to any provisions of applicable tax treaties.
The so-called “double taxation treaty” between the United Kingdom and France stipulates that on French territory, for sports stars resident in the United Kingdom, activities financed by public funds, local authorities or statutory bodies are largely exempt from tax.
Many of Team GB’s athletes receive funding from the UK government through a tax-free grant of up to £28,000 for elite athletes, provided they earn less than £65,000 from other sources, such as sponsorship deals.
But Andrew Parkes, national technical director at tax consultancy Andersen, warned that problems still exist for self-funded athletes and those paid by sponsors. “For example, when an unfunded British star is paid to attend a sponsor event while in France,” Parkes said. “Here, [tratado] The relationship between France and the United Kingdom does not impair France’s right to impose taxes.
This is not the first time the topic of tax and Olympic athletes has come up. In 2012, Jamaican sprinter and 100m world record holder Usain Bolt was lured back to the UK to compete in the London Olympics with an Olympic tax amnesty for foreign athletes. Bolt has not competed in the UK for the past three years due to what he sees as a high tax burden on his earnings from appearances and sponsorships.
At this year’s Games, it will be up to athletes to file a tax return if necessary, as French authorities are unlikely to send requests to non-residents. That’s a potential “trap” for sports stars, as well as other entertainers and TV presenters who only work for a short period in the country, said Vanisha Kistow, global mobility partner at tax consultancy Blake Rothenberg.
“Athletes need to make sure they are aware of their reporting obligations because there are penalties for non-compliance,” said Kistow. “Like the UK, France has a behaviour-based penalty system, which can be as high as 80% of unpaid taxes.”
There are nuances to the rules that create obstacles for athletes trying to assess the tax exemption and deductible expenses available. One condition of the French tax exemption is that the payment to the non-resident athlete or artist “is not borne by a permanent establishment owned by the British employer in France”.
In the case of sponsorship, if an athlete receives income from a sponsor with an office in France, he may be liable for tax on that income, Kistow said. “There may be an obligation for the sponsor to withhold tax at source in France before making payment to the athlete.”
A withholding tax of 15% is imposed, but under a double taxation treaty, athletes can request an exemption.
Helen Jones, a partner in the private client tax team at BDO, encourages athletes and entertainers to “maximise the exemptions available” to avoid paying any unnecessary fees.
