Nadal Won’t Pay to Play Queen’s

Robert Lee, Tax-News.com, London.

21 October 2011

Former World No. 1 tennis player Rafael Nadal has announced that he will not play next year’s Queen's Club Championships due to UK tax law.

The UK tax on non-resident sportspeople has pushed Nadal to withdraw from the competition with the tennis player saying that he could actually lose money by attending the event.

Under current UK tax rules, sports stars taking part in sporting events in the UK are liable for income tax on prize money and appearance fees. However the UK also seeks to tax a proportion of an athlete's global endorsement income, based on the number of appearances in the country, even if the income concerned never touches the UK.

Under these rules, it is possible for the foreign competitors to pay more in UK income tax than they actually earn in the UK. Unsurprisingly, because of these rules, many international sports stars have curtailed their UK appearances, or refused to compete in matches and tournaments in the country altogether, including Olympic sprint champion Usain Bolt.

These tax rules are based on a House of Lords decision in 2006 against Andre Agassi, who had challenged an assessment of USD50,000 for the 1998-99 tax year in respect of a portion of the star's Nike and Head endorsement earnings; Agassi had appeared at a number of tournaments in the UK. The Court of Appeal had previously ruled in Agassi's favour because neither he nor the sponsors were UK-based. However, the decision was overturned on appeal by HMRC to the Lords.

After concerns that the 2012 Olympic Games would be jeopardized, tax exemptions have been put in place for the London event. However, foreign participants in the Games could still be liable to tax in relation to promotional work undertaken in the country under tax legislation introduced to deal with the Games.

Although there is no such exemption for Nadal next year he says that he will still play the ATP World Tour finals and Wimbledon in 2012.

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