Lo and behold, the socialist republic of USA has exactly the same tax rules:
There are several issues which have become the center of IRS scrutiny, including the determination of an athlete’s or entertainer’s residency for tax purposes (which is broader in scope than residency for immigration purposes), characterization of income, business structures established by or for foreign athletes and entertainers, and potential improper use of treaties and income allocations. Castroneves’ alleged tax evasion, in part, involves an abusive use of foreign shell companies to avoid U.S. taxes on his endorsement income from Penske.
Characterization of income is a crucially important issue. Under U.S. tax law, individuals who are neither citizens nor residents of the United States are subject to U.S. income tax on income they earn from performing services in the United States. This includes, among other items, prize money earned by foreign athletes from U.S. tournaments. Prize money is not an issue, however, because tournaments generally withhold the appropriate amount of U.S. tax before transferring the prize money to the athlete. The concern is whether the foreign athlete is properly reporting and paying taxes on his or her endorsement and sponsorship income attributable to the performance of services in the United States.
A significant number of foreign athletes competing in U.S. tournaments earn applicable endorsement income from sources all over the world. Where an athlete (or entertainer) receives a payment for the use of his or her name, likeness or signature, such payment is generally considered to be a “royalty” subject to tax, in principle, in the country of use but frequently exempt from source tax under tax treaties. However, if, pursuant to a contract, an athlete or entertainer is required to perform services in the United State on behalf of a sponsor, payments received on the contract generally are considered to be personal services income subject to tax by the United States. For example, where a contract requires a foreign golfer to appear at the U.S. Women’s Open wearing clothing bearing a sponsor’s logo or using a sponsor’s golf clubs, such athlete has performed a service on behalf of the sponsor in the United States. Further, if a foreign athlete appears in the United States to endorse a sponsor’s new product, the athlete has performed a service in the United States.
On this basis, the IRS believes that a portion of a foreign athlete’s worldwide sponsorship income may be subject to U.S. income tax. The IRS also justifies taxation on the basis that the foreign athlete is able to attract and secure sponsorships, in part, because of his or her performance in U.S. tournaments. This position may sound harsh, but the United States is not the only country taking this position (consider the U.K. tax authority’s taxation of Andre Agassi’s Nike endorsement income in 2006).