Nadal to skip all UK tournaments to not lose money?

by eraldeen Thu 13 Oct 2011, 7:20 pm

Tennis-London could lose ATP finals over tax warns Nadal

London risks losing the showcase end-of-season ATP World Tour Finals because of the high rate of British tax, world number one Rafael Nadal said at the Shanghai Masters on Thursday.

The Spaniard believes the 50 percent tax on players' appearance fees, winnings and a proportion of their worldwide endorsement earnings could see the glamour event featuring the top eight men being staged elsewhere unless the law is changed.

"It is really tough what is happening today in the UK with the tax. There are a lot of things that are really positive. This (tax) thing is probably really negative," he said after losing in the third round to German Florian Mayer.

"What I believe in my heart, is that London is a fantastic event. There's a full crowd at every match, a fantastic stadium. But London is not the only city in the world," he said.

The five-year contract for the ATP World Tour Finals, staged at the 02 Arena, comes up for renewal in 2013 but Nadal indicated that growing discontent could see players pushing for the event to be moved to a more favourable tax environment.

"The tax regime from UK is complicating a lot of things because to go and play at Queen's, the problem is not to win. The problem is I can lose money because I go there.

"I play for one week, and they take out money from my sponsors. That's a lot," he said of the Wimbledon warm-up event he has decided to skip next year in favour of playing at Halle.

"I'm going play at Wimbledon. I'm going to play in the World Tour Finals. So that is a lot of weeks, a lot of tax. It is becoming more and more complicated to play in the UK at the moment," he said.

TAX CHANGE

However, a change to the tax regime could help London renew its contract for the ATP finals, added the Spaniard.

"So (if there is a tax) change, the chances of keeping the World Tour Finals in London are going to be very, very high," he said.

Nadal dismissed suggestions in the British media that he had decided to play the Halle event in Germany instead of Queen's because he had been offered a higher appearance fee.

"For the last four years, I have played at Queen's. So we thought it is the right moment to change. I am not changing because Halle is paying me more money than Queen's. That's not the reason," he said.

Wimbledon chief executive Ian Ritchie called on the government earlier this year to change the tax laws or risk Britain losing some of tennis's marquee events.

Government rules state that sportsmen and women competing or even just practising in the UK are taxed a proportion of their income from endorsements and sponsorships even if those deals have nothing to do with Britain.

The rules are the reason triple Olympic champion sprinter Usain Bolt has stayed away from the London Diamond League meetings and there are also fears they could affect some of the country's smaller golf tournaments.

http://uk.eurosport.yahoo.com/13102011/2/tennis-london-lose-atp-finals-tax-warns-nadal.html

This makes Nadal look avaricious and greedy for money. censored

by time please Thu 13 Oct 2011, 7:24 pm

I saw this in The Times today - wasn't aware of the tax rules governing sporting events - need to digest a little more to understand all the implications but clearly it would be very sad for Britain to lose WTF and all the revenue that it generates.

by wow Thu 13 Oct 2011, 9:27 pm

I am with Nadal on this one.

by hawkeye Thu 13 Oct 2011, 9:40 pm

I have been reading about this too.

I hope Nadal has a good support team. He appears to be a good guy who wants to do the right thing. I know it may be selfish of me but I would like to think he would just be able to focus on hitting tennis balls and not have to worry or explain these sorts of things. Just as I try to do when I watch...

by Josiah Maiestas Thu 13 Oct 2011, 9:42 pm

You cannot tax your way out of the problems, GB, I agree with Rafa and the others, BUT they shouldn't get special rules just because they are tennis/soccer stars. This high tax situation just breeds negativity and the people will lose the desire to succeed (in all walks of life).

by newballs Thu 13 Oct 2011, 9:52 pm

If Nadal is better off financially playing in Germany rather tan at Queen's leading up to Wimbledon who can blame him from staying away? He's not a charity.

by Josiah Maiestas Thu 13 Oct 2011, 9:56 pm

newballs wrote:If Nadal is better off financially playing in Germany rather tan at Queen's leading up to Wimbledon who can blame him from staying away? He's not a charity.

He has played at Queens long enough, Weber Open in Halle is a very decent event and deserves to have a decent year after last years debacle..

by time please Thu 13 Oct 2011, 10:35 pm

The ridiculous thing is that they are taxed on 'passive income' ie the income they get from sponsorship - now I am not sure how this is worked out or even why it should be if the sponsors are not British companies? Is is an arbitary amount?

Again it is impossible to link this article because it is in The Times, but it does seem as if negotiations are ongoing and sportsmen may be successful in challenging this - in the meantime if we are losing top class sportsmen from events then revenue generated by said events will be affected and everyone is the loser, including Inland Revenue!

by Fedex_the_best Fri 14 Oct 2011, 6:31 am

Eraldeen - no, I dont think Nadal is at wrong here or even greedy.
This is a stupid law and many top athletes stay away from UK because of this. I know Usain Bolt flatly refused to come to London few years back because of this.

by time please Fri 14 Oct 2011, 8:13 am

If it was simply a tax on winnings then while it would still be understable that a player might chose Halle over Queens, but it would seem to be a little excessive to make a plea for London to lose WTF.

I just can't understand why it is appropriate for our government to tax Nadal on his 'passive income' from Nike, Richard Mille, Babalot, Armani etc - it seems insane. I think he is probably exaggerating a tad when he claims to need to win Queens to break even given the large appearance fee he must command, but nevertheless it is insane if the system penalises the very best players in the world, solely because they attract sponsorship. I could even understand it a little bit more if the companies sponsoring Nadal were based in Britain and subject to British Tax laws, but this seems very strange indeed.

by erictheblueuk Fri 14 Oct 2011, 10:42 am

"Nadal to skip all UK tournaments to not lose money?"

--------------------------------------------------

Isn't this a bit mis leading he's playing Wimby and the WTF's he's only missing Queens.

by bogbrush Fri 14 Oct 2011, 12:02 pm

Don't get me started on tax. This country has totally lose its way thinking that it can solve problems by taxing. In the end you have to create wealth to live and if people decide it's not worth their while then it's screwed.

Low tax rates is the way forward, with no tax at all at the lowest end.

by legendkillar Fri 14 Oct 2011, 12:12 pm

I would be peed off if we lost the WTF. Given that other countries might start to follow suit given their financial plight too.

by lydian Fri 14 Oct 2011, 12:44 pm

This country has always taxed to the hilt since medieval times. The problem is the treasury has become reliant on its income. We have a burgeoning welfare state, increasing unemployment, an aging population and we like to give loads of money to other countries....I dont see the tax burden dropping any time soon!

by Jahu Fri 14 Oct 2011, 12:59 pm

But UK does not charge tax on worldwide income, otherwise you would not have Russian billionaires and Indian tycoons settled in UK, as they pay only tax on income earned in UK. Why should sport people pay tax on income out of UK and let alone at 50% rate. Thats plain crazy.

I'm all for taxing say 10-15% of winning money on UK soil but not at this rate and not at worldwide endorsements.

by **laverfan** Fri 14 Oct 2011, 2:48 pm

Here is a non-PPV article.

Britain's new tax rules have implications for all manner of UK-based sporting events. Usain Bolt earns an estimated £6.6m from endorsements, and is likely to appear at 10 events this year. Had one of them been at Crystal Palace, which he turned down for tax reasons, he would have been taxable on 10 per cent of that figure – some £660,000, as well as his £100,000 appearance fee. Total bill: £357,200, leaving him around £300,000 down overall.

Already Roger Federer prefers to play his Wimbledon warm-up event in Germany rather than at the Queen's Club.

For marathon runners, who compete in few races each year, the implications are starker still. If they run two races, one of them in London, half their total endorsements would be taxable here.

The UK is currently the only nation in Europe that taxes endorsement income. Wembley Stadium lost out on its bid to host the 2010 Champions' League final after failing to provide assurances that players would not be taxed. A special waiver was introduced in March to help prevent Wembley losing the 2011 final.

In golf, Sergio Garcia has revealed he limits UK appearances due to tax. After playing in the Scottish Open last month, the Spaniard would have had to finish in the top three at the next week's Open just to break even.

http://www.independent.co.uk/sport/golf/tiger-and-the-1631m-tax-bill-how-british-law-may-scare-off-woods-from-ryder-cup-2048016.html

Edit: http://www.ft.com/intl/cms/s/0/3c14a696-6e86-11e0-a13b-00144feabdc0.html#axzz1alORCElx

If there is a 'special' waiver for Wembley, why not allow it's use elsewhere? Erm

by lydian Fri 14 Oct 2011, 3:03 pm

Something's going to have to shift now because this story will put off people attending events in future more so than before...come on Osborne, pull your finger out.

by bogbrush Fri 14 Oct 2011, 3:09 pm

Problem for Osborne is that if he touches tax in any intelligent way he'll get howled down for attacking hardworkingfamilies.

by lydian Fri 14 Oct 2011, 3:18 pm

That'll be Milibland's message I'm sure. At a time when we're printing money we need fiscal stimulus to get the economy going...only way to do that is put more money in people's pockets (tax cuts) and ease B2B credit flow. But this coalition sham of a government doesnt have the cojones to do it when we're saddled with debt the size of Federer's bank balance.

Anyway, still particular tax issue is a small loophole that shouldnt have too many broader ramifications if Gideon closed it.

by bogbrush Fri 14 Oct 2011, 3:23 pm

Really what we need is an economy based on production rather than consumption.
Productivity is the only way to wealth! We all make double, trade it to each other, and all be twice as well off. Any other solution based on false signals such as inflation are doomed.

Plus we need to stop bailing out failing business, relax access to markets, make education optional, reform land ownership, in my dreams, etc.

by lydian Fri 14 Oct 2011, 3:39 pm

lol BB...indeed, not much to ask then!
Agree re: productivity - which is enhanced by people having more money to spend on goods (but not money from easy credit as was case 00-09). Of course printing money is one sure way to head to the rocks of inflation and ensure we keep flatlining along on low interest rates. I love the way they call it "easing"! The problem is we have a government based on 2 opposing ideologies so no clear mandate for economic policies come through - I'd rather we pursue a clear vision that's wrong rather than a muddled, backroom dealing system of policy making. The last election, IMO, was the worse result for UK PLC.
Dont get me started on the UK's education "system" and university for all approach (that's not an elitist assertion BTW)...and we have John Prescott to thank for all the "council flat blocks of the future" that were built because the ODPM only allowed building on "brown" sites rather than selected green belt.

by **JuliusHMarx** Fri 14 Oct 2011, 3:56 pm

I guess if running the country were easy someone with enough brains would have come along and done it effectively by now.

by lydian Fri 14 Oct 2011, 3:58 pm

Indeed...always easy from here to point the finger.
But then again, never underestimate the stupidity of people in large groups.

by **laverfan** Fri 14 Oct 2011, 6:00 pm

lydian wrote:Indeed...always easy from here to point the finger.
But then again, never underestimate the stupidity of people in large groups.

Are you referring to the Footie fans (or the groups on 606v2), perchance? laughing

by Guest Fri 14 Oct 2011, 7:11 pm

This tax lark reminds me of the dilemma the Government put the film industry in a few years ago, when it stated it was going to tax foreign film studios more for using our great facilities and craftsmen.

And we know what a shambles erupted from that greedy cull.

by hawkeye Fri 14 Oct 2011, 10:29 pm

lydian wrote: I'd rather we pursue a clear vision that's wrong rather than a muddled, backroom dealing system of policy making

Thats crazy!

Its better to follow a correct vision obviously but following a wrong vision is the worst possable choice especially if it is followed stongly. The muddled option would do far less damage.

laverfan

That was excellent research. Thankyou I enjojed reading it.

by lydian Fri 14 Oct 2011, 11:29 pm

I know hawkeye, I was speaking figuretively really. We seem to have no idea about the way through this, and a government that cannot clearly act due to trying to keep 2 different tribes happy.

by time please Sat 15 Oct 2011, 1:29 pm

laverfan wrote:If there is a 'special' waiver for Wembley, why not allow it's use elsewhere?

I think it should be waived completely - I can't see how players can be taxed on earnings outside the country when they are not British citizens - it's completely bizarre!

by eraldeen Sat 15 Oct 2011, 3:49 pm

You don't see Djokovic complaining about playing Queen's... thumbsup

by **laverfan** Sat 15 Oct 2011, 4:10 pm

I just picked Australia, out of some personal interest. This is from an older document (circa 2002), but is very interesting reading.

There is a clear distinction between 'royalties' and 'services' performed in this specific instance.

For example, if Nadal's name on Armani jeans, or Federer's name on Rolex, and either of them derive a percentage, it would be 'royalties'.

But Nike's sponsorship of Federer or Nadal is not so clear and is dealt with on a case-by-case basis. (Is Nike using the sponsorship only for Australian products or not?, etc.?)

Why can not the British Treasury and Taxation become simpler for athletes? Erm

"Product endorsements and sponsorship fees arise when an athlete lends their name to a product or appears in an advertisement promoting a product or sporting event. Such income will be characterised as personal exertion income, if the advertisement is completed while the athlete is in Australia. However, according to Federal Commissioner of Taxation v Mitchum (Mitchum’s case) the fact the service is performed in Australia is not always decisive of the source of income. If the contract is completed and the fee is paid in another country, then, for the reasons described above in relation to the appearance fee, it may be argued that the fee does not have an Australian source. The result will depend on the weight given to the contributing factors, in light of the particular circumstances of the case.18
Again, the income derived from endorsements may be characterised as a royalty. This would be the case, for example, where the athlete’s name appears on a product. In return, the manufacturer might agree to pay the athlete a certain amount of money for each item sold. The definition of royalty income under s 6(1) ITAA 1936 includes consideration for the use of a ‘trade-mark or other like property or right’. The use of an athlete’s name is likely to be considered to be a trade mark so that any payment received will be a royalty and therefore subject to withholding tax.19 "

http://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1133&context=rlj&sei-redir=1&referer=http%3A%2F%2Fwww.google.com%2Fsearch%3Fclient%3Dsafari%26rls%3Den%26q%3Daustralian%2Btaxation%2Bon%2Bsports%2Bpeople%26ie%3DUTF-8%26oe%3DUTF-8#search=%22australian%20taxation%20sports%20people%22

Regarding Djokovic (who lives in Monaco), this is perhaps relevant.

http://www.telegraph.co.uk/finance/globalbusiness/7243401/Monaco-might-not-charge-residents-income-tax-but-its-no-tax-haven.html

by czaree Sun 16 Oct 2011, 5:59 am

laverfan wrote:Here is a non-PPV article.

Britain's new tax rules have implications for all manner of UK-based sporting events. Usain Bolt earns an estimated £6.6m from endorsements, and is likely to appear at 10 events this year. Had one of them been at Crystal Palace, which he turned down for tax reasons, he would have been taxable on 10 per cent of that figure – some £660,000, as well as his £100,000 appearance fee. Total bill: £357,200, leaving him around £300,000 down overall.

Already Roger Federer prefers to play his Wimbledon warm-up event in Germany rather than at the Queen's Club.

For marathon runners, who compete in few races each year, the implications are starker still. If they run two races, one of them in London, half their total endorsements would be taxable here.

If that is true and every country applies the same rule taxing 10% of total endorsement then a player would in fact has more income tax money to pay than what he earns at the end of the season. Does that make sense or is it legal internationally? can it be challenged?

The UK is currently the only nation in Europe that taxes endorsement income. Wembley Stadium lost out on its bid to host the 2010 Champions' League final after failing to provide assurances that players would not be taxed. A special waiver was introduced in March to help prevent Wembley losing the 2011 final.

In golf, Sergio Garcia has revealed he limits UK appearances due to tax. After playing in the Scottish Open last month, the Spaniard would have had to finish in the top three at the next week's Open just to break even.

http://www.independent.co.uk/sport/golf/tiger-and-the-1631m-tax-bill-how-british-law-may-scare-off-woods-from-ryder-cup-2048016.html

Edit: http://www.ft.com/intl/cms/s/0/3c14a696-6e86-11e0-a13b-00144feabdc0.html#axzz1alORCElx

If there is a 'special' waiver for Wembley, why not allow it's use elsewhere?

by czaree Sun 16 Oct 2011, 6:09 am

laverfan wrote:Here is a non-PPV article.

Britain's new tax rules have implications for all manner of UK-based sporting events. Usain Bolt earns an estimated £6.6m from endorsements, and is likely to appear at 10 events this year. Had one of them been at Crystal Palace, which he turned down for tax reasons, he would have been taxable on 10 per cent of that figure – some £660,000, as well as his £100,000 appearance fee. Total bill: £357,200, leaving him around £300,000 down overall.

Already Roger Federer prefers to play his Wimbledon warm-up event in Germany rather than at the Queen's Club.

For marathon runners, who compete in few races each year, the implications are starker still. If they run two races, one of them in London, half their total endorsements would be taxable here.

The UK is currently the only nation in Europe that taxes endorsement income. Wembley Stadium lost out on its bid to host the 2010 Champions' League final after failing to provide assurances that players would not be taxed. A special waiver was introduced in March to help prevent Wembley losing the 2011 final.

In golf, Sergio Garcia has revealed he limits UK appearances due to tax. After playing in the Scottish Open last month, the Spaniard would have had to finish in the top three at the next week's Open just to break even.

http://www.independent.co.uk/sport/golf/tiger-and-the-1631m-tax-bill-how-british-law-may-scare-off-woods-from-ryder-cup-2048016.html

Edit: http://www.ft.com/intl/cms/s/0/3c14a696-6e86-11e0-a13b-00144feabdc0.html#axzz1alORCElx

If there is a 'special' waiver for Wembley, why not allow it's use elsewhere?

Sorry for the mistake of earlier post. If it's true that 10% of worldwide endorsement is taxed, if it's for the whole year duration of income rather than the proportionate percentage based on time spent in UK then it's highly unfair and cruel. That being the case and every country follows suit then players would have to pay more income tax than what they earn from endorsement. To make it more cruel why not tax their whole season earning as well. I think it's proportionate earning but still an unfair rule.

by **laverfan** Sun 16 Oct 2011, 12:08 pm

Agree. Indiscriminate taxation has created/will create problems. I would not be surprised if players chose to move to other friendlier tax locations.

Edit: Should the entire Eurozone not have a consistent taxation policy?

by Guest Sun 16 Oct 2011, 12:42 pm

Companies pay significant amounts of money on marketing and advertising in order to increase their market share within a given market as well as attempting to expand the market itself for their products and services.

My question is - is it cheaper for companies to sponsor "well known" sporting figures rather than to pay for more direct advertising and marketing?

In the current Rugby Union World Cup being played down under, two English players were fined for wearing mouth guards that had their sponsors logo on it - companies that had paid the players but hadn't paid the tournament for the advertising they had received (both directly and indirectly through association).

by time please Sun 16 Oct 2011, 12:54 pm

That is a good question Nore and I would guess that per event it is cheaper to sponsor a sporting figure than to have billboards around the event or pay for advertising space in a programme.

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