TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, July 22, 2012

A Taxing British Open

The OpenTaxTV:  The Open Championship, A Taxing Golf Tournament:

[N]ow is a good time to review the UK’s taxation rules on non-resident athletes. Not only will the golfers in this week’s tournament be liable for taxes on their winnings, but they will also owe Her Majesty’s Revenue and Customs (HMRC—UK’s tax collector) for taxes on endorsement income. In fact, even those who do not make the cut -- and will therefore not earn money from the tournament -- must pay taxes on endorsements. HMRC has a “Foreign Entertainers Unit (FEU)” whose job is to track the movement of athletes and entertainers who play or perform in the UK throughout the year. Tournaments withhold taxes from athlete earnings, so tracing income and withholding is relatively easy. ...

[G]olfers playing in The Open Championship will pay taxes on the following income from this week’s work:

  • Tournament Winnings -- for those who make the cut
  • Endorsement Retainers -- taxed based on days playing/practicing in the UK v. days playing/practicing elsewhere
  • Winning/Placing Bonuses -- fully taxed by the UK
  • Ranking Bonuses -- taxed based on ranking points earned in the UK v. points earned elsewhere
  • Paid appearances before, during & after The Open

(Hat Tip: Cory Birkhauser.)

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The US Treasury, of course, will subsidize American golfers who pay these taxes. To the extent that British tax rates do not exceed our tax rates, it's a wash: What Inland Revenue takes, IRS gives away as foreign tax credits.

Posted by: Bob | Jul 22, 2012 11:18:17 AM

Yes the taxes in Britain are high, but do any of my fellow hackers out there (full disclosure: my handicap is +18 along with a total lack of ability and skill) say that they would not trade their lives for the life of a professional golfer? Anybody?

Posted by: David R. | Jul 23, 2012 10:16:42 AM