Taxation of international sportspersons in The Netherlands
The sportsperson who perform activities for his job across borders are more common these days. Nowadays a lot of athletes perform sports activities in more than one country. This occurs mainly because of the event management organisation or sports organisation is bringing more skilled athletes of different nationalities to the team or event. Mostly they represent themselves as an individual or in a group. The complexity of this story is that more than one country would like to tax the same piece of the pie.
The income that a national or international sportsperson earns during these activities will be taxed by both countries. The national athlete will be considered as a resident taxpayer in their home country and therefore needs to declare his or her worldwide income in the income tax return. The income that an international athlete earns is considered as income from a non-resident taxpayer, thus only taxable in The Netherlands if the income has occurred during the stay in The Netherlands. The difference between these two groups is that double taxation may occur with the international sportsperson, because both countries would like to tax the income that is earned in The Netherlands. The Netherlands taxes this income because the income is earned in The Netherlands and the residence state of the taxes the worldwide income. Double taxation as result if neither of both countries will not step back!
The Netherlands has more than 92 tax treaties with countries all over the world to resolve double taxation. In these treaties is covered which country has the right of taxation. A tax treaty can’t create tax rights if the tax right doesn’t derive from domestic law. The incoming sportsperson will be granted either a tax exemption regarding the taxation in the residence state or a tax credit of the taxes that has occurred in The Netherlands. When the tax percentage is higher in the residence state there will be an advantage if the treaty between both countries is using the exemption method. This all, first of all, depends where the fiscal residence is of the international sportsmen or sportswoman.
Under normal circumstances, after the sports activities has been performed, a sportsperson will return to their own home country. After all it would not be likely that the athlete will change his residence country to the state where he performed sports related activities. Within tax treaties is defined which country has the residence status of a person. In most cases this is not always completely clear. For example, it can occur that a sportsperson has several properties in different countries where they reside a couple of months and different other factors will be taken into account to review this matter. In the end it will come down to the question: where is his or her centre of vital interest and which country can be qualified as a permanent home. If both countries still claim the residence status then this will be settled by mutual agreement procedures.
Brouweel
If you found this article interesting or you are a sportsperson and you would like assistance regarding your taxes, then do not hesitate to contact us. We are happy to assist, contact us at info@brouweel.nl
