Net gains, net pains: taxing times on and off the court
In the lead up to Wimbledon, one of the most prestigious Grand Slam’s in the world, here at Price Bailey we have decided to mark the event by providing some expert insight into the complex tax challenges tennis players may face.
This week, the world’s top tennis professionals will descend on London, chasing glory on the courts of Wimbledon—and with it, the chance to earn millions in prize money and global endorsements. Beneath the surface lies a complex and often burdensome financial reality. Navigating the complexities of international taxation is one of the most significant challenges for professional tennis players particularly as self-employed individuals…
Find out more about some of the challenges from our experts below…
Global tax consequences
Unlike athletes in team sports who are typically based in one country, tennis players are constantly on the move. The professional tennis calendar spans nearly every continent, with tournaments in Australia, Europe, North America, Asia, and beyond. This lifestyle means that players are often subject to taxation in multiple countries throughout the year.
Most countries impose what is known as ‘source-based taxation,’ which means that athletes are taxed on the income they earn within that country’s borders. For tennis players, this typically includes prize money, appearance fees, and sometimes even a portion of endorsement income if it is deemed to be connected to their performance at a specific event. At the same time, players may also be liable for taxes in their country of residence on their worldwide income. Without careful planning, this can lead to double taxation, a situation where the same income is taxed twice by different jurisdictions.
For UK resident tennis professionals, this means they have exposure to UK taxation on their worldwide income, making effective tax planning even more critical.
High earnings
While the best tennis players can earn tens of millions of dollars annually, their tax obligations can be equally staggering. In some cases, players face effective tax rates of 40–50% or more, depending on where and how their income is earned. Countries such as the UK, France, and Spain are known for their high tax rates on foreign athletes, and even countries with lower rates may impose withholding taxes on prize money.
For UK residents, the UK has double tax treaties with many countries. This means that where income is taxed abroad, players may be eligible for tax relief in the UK to ensure they are not taxed twice on the same income.
Endorsement deals, which often make up the bulk of some player’s income, add another layer of complexity. These deals may be structured through international corporations or licensing agreements, and the tax treatment can vary widely depending on the jurisdictions involved. Without proper structuring, players can find themselves paying far more in taxes than necessary.
Expenses and deductions
To mitigate their tax burden, tennis players are allowed to deduct legitimate business expenses. These can include travel and accommodation costs, coaching and training fees, equipment, physiotherapy, and payments to agents and managers. However, the rules governing these deductions differ from country to country, and what is considered a valid expense in one jurisdiction may not be recognised in another.
In the UK, expenses must meet the ‘wholly and exclusively’ test—meaning they must be incurred wholly and exclusively for the purpose of the business—in order to qualify as deductible.
Detailed record-keeping is essential, and any discrepancies can trigger audits or lead to denied deductions. We would always suggest seeking advice from one of our experts.
Financial planning
In addition to tax advisors, many players should consider their financial future. The average career span of a professional tennis player is relatively short, and injuries can abruptly end a career. As a result, long-term financial planning; including investments, retirement savings, and estate planning may be crucial.
While the spotlight will shine on the athletic achievements of tennis players this week, their financial lives are far more complex than most fans realise. The global nature of the sport, combined with high earnings and diverse income streams, creates a uniquely challenging tax environment. With the right guidance and planning, however, players can navigate these hurdles and secure their financial future. Speak to our experts to find out more, or to request specific advice tailored to your situation.
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We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.