Rafa to skip Queens due to tax laws!

Discussion in 'Pro Match Results and Discussion' started by wintintu, Oct 15, 2011.

  1. Bartelby

    Bartelby G.O.A.T.

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    So corporations spending billions to buy American governments and their policies are socialists intent on destroying civilization?



     
  2. batz

    batz G.O.A.T.

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    I think there is a general exemption for team sports. Messi has played for Barca in the UK on several occasions over the last few years and I'm pretty sure he's never had to hand anything over to UK tax authorities.
     
  3. Bartelby

    Bartelby G.O.A.T.

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    My guess is that there is no exemption for team sports per se, but a team flies in and flies out and whatever it promotes it promotes as a team on the field so if any tax is paid it would be paid by the company that runs the team.

    If Messi spent the day before or after the game on a promotional tour then that would be a different thing.
     
  4. omigod

    omigod Rookie

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    I think what Nadal was saying:

    (As an example)

    Nike's contract pays him 10 million Euro per year.
    Assuming his tax residence status is Spain.

    Tournament appearance fee is 1 million Euro, 77,500 Euro if he wins

    Under current rule, if he plays Queens, he will be taxed for his income at the tournament and his passive income (sponsorship deal).

    Nadal will get 10 million Euro from Nike whether or not he plays at Queens.

    If he does get a bonus from Nike for going to UK, yes, that will be income in UK and taxed.

    What Nadal is saying that the portion UK tax office takes off Nike is greater than the sum of all his potential income in UK.

    So effectively net/net he will need to pay out of his own pocket to play in Queens.

    The tax is proportional to the time spent in UK so Nadal is simply minimizing his time in UK. Wimbledon and Masters has a bigger purse so if he goes deep into the draw, he will come out ahead.

    Queens is a smaller tournament so net/net it does not make sense.

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

    HM Revenue & Customs (HMRC) have exempted this tax rule for the 2012 London Olympics.
    http://www.bbc.co.uk/news/business-11981604
     
  5. Bartelby

    Bartelby G.O.A.T.

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    Nadal is saying the prize money earned won't compensate for the tax paid on his promotional activities, but the fact is that he's paid to turn up in the various markets by companies to do precisely that, but in this case he's getting paid more to go to Halle and the sponsors don't mind and he won't pay any tax.
     
  6. Bartelby

    Bartelby G.O.A.T.

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    Business always promotes and lobbies for taxes like VAT and without business support these kinds of taxes would have no real support.




     
  7. vernonbc

    vernonbc Hall of Fame

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    What is all this promotional activity you keep referencing? He's not paid to turn up in various markets to promote a product, he's paid to play tennis.
     
  8. Clarky21

    Clarky21 Banned

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    Are you serious? His off court promotions have been off the charts this year. I guess you conveniently missed all the promo crap he did in NY this year for Armani and Bacardi,etc? How about the Kia promo crap he did at the AO? He's been pimped out at nearly every tournament he has entered this year it seems,especially at the slams. He was just doing more promo junk for Bacardi in Shanghai,but I guess you missed that,huh? :lol:
     
    Last edited: Oct 18, 2011
  9. Max G.

    Max G. Hall of Fame

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    Even that is naive. Sponsors pay him to use their gear and their clothing while he plays tennis - him playing tennis IS ALSO a promotional activity.
     
  10. NLBwell

    NLBwell Legend

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    Would you play in a tournament if the entry fee was $250,000? (even more if you didn't win it)
     
    Last edited: Oct 18, 2011
  11. Bartelby

    Bartelby G.O.A.T.

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    No, but your analogy makes no sense because Nadal is basically multi-tasking and his wrist is a mobile billboard as is the rest of his body.

    Moreover, his total tennis income for the year is dwarfed by the money he earns from endorsing Babolat, Nike, Armani and wristwatches.

    And some of that money is earned in foreign climes so the British Government says that when it is earned there tax should be paid.



    QUOTE=NLBwell;6070641]Would you play in a tournament if the entry fee was $250,000? (even more if you didn't win it)[/QUOTE]
     
  12. NamRanger

    NamRanger G.O.A.T.

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    Fixed. Enjoy everyone!
     
  13. Bartelby

    Bartelby G.O.A.T.

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    Karl Marx - great thinker - but the labour theory of value that you quote comes from Locke via Ricardo.

    F A Hayek: ' a dictatorship may be a necessary system for a transitional period ... it is necessary for a country to have, for a time, some form or other of dictatorial power... it is possible for a dictator to govern in a liberal way'
     
    Last edited: Oct 18, 2011
  14. NLBwell

    NLBwell Legend

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    Your post makes no sense.
    Nadal has 3 choices -
    pay $250,000 to play Queens,
    stay home and practice and not pay anything,
    or play a different tounament (Halle) and get paid over $250,000.
    Which would you do?


    Are you saying Nadal is evil because he doesn't volunteer to take a week out of his life, travel to a foreign country, wear out his body, risk injury, and pay the country a pile of money?

    That sounds like something the wacky Occupy Wall Street people would say.
     
  15. Bartelby

    Bartelby G.O.A.T.

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    If you read what I wrote you would see that I argue he should go to Halle, but he is not being fined to play Queens he is just being subject to a different taxation regime which is perfectly fair and equitable.

    He is paid to travel the world and appear with products for which he is paid an immense amount of money for little more than wearing stuff.

    He pays tax on this income and when this promotional activity occurs in Britain, the Government rightly says its money earned in Britain and tax should be paid.

    Djoko lives in his tax haven so how do you tax him, and all the other multinationals, well you tax him, or them, when they work and earn income in your country.





     
    Last edited: Oct 19, 2011
  16. Love Game

    Love Game Talk Tennis Guru

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    I must admit that makes me nervous. Anytime the multinational corporations are the ones essentially making the laws by paying off the lawmakers .... well, isn't that the fascist economic model?
     
  17. batz

    batz G.O.A.T.

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    Lionel Messi is paid x million per annum to use a certain type of football boot. Rafael Nadal is paid y million per annum to use a certain type of tennis racket.

    When Messi plays in the UK, he doesn't pay any tax on the money he is making from wearing his boots. When Nadal plays in the UK, he pays tax on the earnings from using his racket.

    Why are you struggling with this?
     
  18. Bartelby

    Bartelby G.O.A.T.

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    Why are you struggling with the idea that Nadal is also a male model who gets paid more money to wear stuff than to play tennis?

    Nadal has a problem with this idea as well, but he has no problem signing the modelling contracts and cashing the tens of millions of dollars.

    Nadal is also getting paid more to turn up to play a single game than he can ever hope to earn even if he wins the event.

    Messi is kind of short so maybe he doesn't make any money like that, but even he promotes stuff and if it's a global brand then he'll pay in Britain.

    I didn't globalise capitalism nor turn sports people into global celebrity brands, but that's what happened to Nadal.




     
    Last edited: Oct 19, 2011
  19. batz

    batz G.O.A.T.

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    Messi has his own clothing company

    http://www.lionel-messi.co.uk/news/lionel-messi-clothing-range.html


    Messi getting money from his boot sponsor is exactly the same thing as Nadal being paid money by his racket sponsor - they should be taxed on the same basis.
     
  20. Bartelby

    Bartelby G.O.A.T.

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    It says he's launching his own clothing company, so why would you think he won't be taxed on the same basis as Nadal if engaged in the same activity?

    There's no exemptions for teams. as far as I can see, only for special global events lke the Olympics and some football events, which are exempted for tourism reasons presumably.



     
  21. vernonbc

    vernonbc Hall of Fame

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    Yes it is and yes he should. Perhaps he is but does he stay in England for two weeks at a time like Rafa does when he goes to play Wimbledon?
     
  22. origmarm

    origmarm Hall of Fame

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    Leaving aside the arguments about socialism and tax for me there is something strange here, it seems to me to be a clear case of double taxation within the EU. If Nadal pays income tax on this income (including sponsorship) in Spain, then he shouldn't have to pay additional tax on it in the UK. I believe he is resident in Mallorca so I assume he pays income tax there.

    This of course would not apply to people who are tax resident outside the EU (such as those in Monte Carlo or Switzerland for example) so they would pay tax locally.

    EDIT: I'm assuming there's something to it per the footballers example also but I'm slightly confused by it.
     
  23. vernonbc

    vernonbc Hall of Fame

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    Certainly seems to be, doesn't it? This whole mess must keep a lot of tax accountants employed and happy.
     
  24. Bartelby

    Bartelby G.O.A.T.

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    He shouldn't pay double taxation, but we can't assume that he does.

    The Djoko example is far easier to use in order to explain this tax.

    He's fully entitled to live in a low tax state, but that's a loss of revenue so when he turns up in another country to earn income what's wrong with taxing him?

    These taxes catch individuals or companies who would pay very little because of their wealth or the sheer mobility of capital.
     
    Last edited: Oct 19, 2011
  25. batz

    batz G.O.A.T.

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    There is a de facto exemption. Messi already gets millions for wearing a certain type of boot - it's the same thing as Rafa's racket sponsorship - yet Rafa must pay tax on his racket sponsorship. You seem to be giving this point a good ignoring to.

    There is no way that every sportsmen who visits the UK is subject to this tax - think how many non UK football teams come come here every year to play CL/Europa League matches - no way do HMRC chase individuals within those teams for tax on their non-core earnings.

    The tax is wrong. They should either tax all foreign sportsmen on their non-core earnings for the time they are in the UK or they should tax none of them.
     
  26. origmarm

    origmarm Hall of Fame

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    The short answer is not a lot is wrong with it. It's a good idea.

    The problem comes when you define what you consider low tax. Should US citizens for example be double taxed? That is currently the case. What about the Swiss (which have a high tax rate)?

    For me it should be based on a list of tax havens which it doesn't appear to be.
     
  27. origmarm

    origmarm Hall of Fame

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    Actually I believe they try and do exactly that. There are some football events that have argued a temporary (i.e. until 2015 I believe?) exemption in view of the tournament schedules being set a long way out.
     
  28. Bartelby

    Bartelby G.O.A.T.

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    How do you know he doesn't pay tax?

    How do you know it doesn't apply to him because he stays less than a day in Britain?

    How do you know if he engages in any promotional activity with the boot or just wears it on the field?

    How do we know Rafa's racquet is what attracts the taxation or the sheer multiplicity of the products he endorses has brought him to attention?

    What makes you think there's not a reasonable minimum level of promotion required before the tax is payable by everyone?

    He's not paying tax on the sponsorship, he's paying tax on the income he makes from a product when he promotes that product in Britain.

    If he wants to white out all his sponsorship brandings and do no promotion in Britain I's sure he won't be charged a brass razoo.



     
  29. batz

    batz G.O.A.T.

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    1. I don't know for sure - I'm speculating that it doesn't happen because nobody has raised it as an issue.

    2. If Messi is in the UK to play football he is here for at least 2 days and usually 3.

    3. I really don't get your point in the next few sentences - earned income is earned income. Making a pound for wearing a boot or making a pound from turning up at an event have the same outcome - £1 of income has been earned.

    Look mate - all I'm saying is that the UK government should tax overseas sportsmen on their non-core earnings on the same basis. I don't see what is controversial about that. You seem to be arguing for some fiendishly convoluted and complex tax basis to be applied - and I don't quite the logic of why.
     
  30. Bartelby

    Bartelby G.O.A.T.

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    re 3. They're making several streams of income, with different dollar values and with different taxation rates.

    They are not non-core earnings from a tax viewpoint, they're earnings made or imputed to be made in Britain.

    The basic tax principle is very simple: you pay tax on income where it's earned.

    As brands are global, they hire global celebrities to promote in markets around the world.

    The British are simply saying if you promote here then you've earned money here and therefore you pay local tax.

    It's not clear to me that they're not treating all overseas sportsmen alike, as per origmarm's post, it seems that's what they're doing.
     
    Last edited: Oct 19, 2011
  31. Bartelby

    Bartelby G.O.A.T.

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    Last edited: Oct 19, 2011
  32. batz

    batz G.O.A.T.

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    I think there is a fundamental mis-understanding in your post as you keep referring to Rafa doing 'promotional work' and implying that it is the earnings from this 'promotional work' that the UK HMRC are demanding tax on. I don't think this is the case.

    UK HMRC are demanding tax on all Rafa's sponsored earnings for the time he is in the UK. I'm guessing that some of these sponsors don't even operate in the UK (I'm sure Rafa does a lot of stuff in Spain for Spanish companies).

    So they are not working out how much Rafa has made by doing babolat/Nike A N Other promotional activities during his week at Queen's and taxing him on the earnings associated with that activity. They tax him on his all his non-core (i.e. not tennis prize or appearance money) earnings for that week.

    They do not do this with Messi or any other superstar footballer - If they did, we would have heard about it.
     
  33. Bartelby

    Bartelby G.O.A.T.

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    You can't be right with this because it would mean he would have to pay a tax on a corner store or property development that he owned in Spain.

    But most of his sponsors are global companies, and that's the problem he has because it means they are in every market in the world, rather than Spain-specific ones.
     
  34. Bartelby

    Bartelby G.O.A.T.

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    The tax rule only involves their global promotional income that is integral to their sport.

    But the real problem does seem to be that it is not taxed on a per diem basis but on a pro rata basis in terms of total events played in the year, so you pay a lot more the less you play.
     
  35. Bartelby

    Bartelby G.O.A.T.

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    For all those who think this tax is socialist, it might pain them to note that it was introduced by the Thatcher Government:


    (1) I am impressed by the Revenue's point that, if Mr Agassi is right, the ease with which the tax liability imposed by section 556 could be avoided simply by ensuring that the potentially taxable payments were made by foreign entities with no residence or trading presence in this country would render payment of the tax to all intents voluntary. That cannot, in my opinion, have been Parliament's intention.

    (2) The disapplication of section 556 envisaged by sub-section (5) requires, in my opinion, attention to the nature and status of the payment, not to the identity of the payer. In order to know whether for section 556(5) purposes the payment is one to which section 555(2) applies, two, and in my opinion only two, questions need to be asked. First, has a payment been made (to whatever person), not being a payment "of such kind as [has been] prescribed" (section 555(6))? If the answer is "yes", then, second, has the payment "a connection of a prescribed kind with the relevant activity"? If the answer to this question, too, is "yes" then, in my opinion, for section 556(5) purposes, the payment is one to which section 555(2) applies. The identity of the payer is, in my opinion, as a matter of construction of section 555(2), irrelevant to the question.

    (3) To imply into section 555(2) a limitation by reference to the foreign status of the payer would, in my opinion, be impermissible. The whole point of sections 555 to 558 is to subject foreign entertainers or sportsmen to a charge to tax on profits on gains obtained in connection with their commercial activities in the United Kingdom. Payments to foreign companies controlled by them are to be treated as payments to them. The infrequent or sporadic nature of their commercial activities and presence in the United Kingdom and the difficulty of collecting from them the section 556 tax on their profits and gains from those activities was one of the reasons why the new collection regime was introduced under the 1988 Act. To read into the statutory provisions a limitation preventing the collection regime from applying where the payer is a foreign entity with no UK presence and thereby relieving the foreign entertainer/sportsman from the charge to tax cannot, in my opinion, possibly be justified on the basis of a presumed legislative intention. I would hold that on the true construction of these sections the territorial limitation cannot be implied and that the statutory language should be given its natural meaning.

    18. Accordingly, I would allow this appeal with costs here and below.
     
  36. Bartelby

    Bartelby G.O.A.T.

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    The first problem related to the concept of carrying on a trade, profession or vocation. Was a person who made only single or infrequent visits to this country, eg, playing in, say, two tennis tournaments, carrying on a trade, profession or vocation in this country? Second, would income arising from commercial endorsements, eg wearing Nike tennis shoes and playing with a Head tennis racquet, be regarded as part of the profits or gains of carrying on the trade, profession or vocation? Third, the section 108 charge only applied to the person carrying on the trade, profession or vocation. Would payments made to a foreign company, albeit controlled by the person exercising the trade, profession or vocation, be caught by the charge? And, fourth, collection of the tax from a foreign entertainer or sportsman, whose visits to this country might be sporadic and who would often have no assets in this country, was not always practicable. This was particularly so because the basis of assessment was the preceding year basis. These were the problems that were addressed in the 1986 Act by provisions that became, on consolidation, sections 555 and 556 of the 1988 Act.

    is Nadal carrying on a profession - yes
    is income from endorsements part of the profits gained from carrying on a profession - yes
    does it matter that foreign companies are making these payments - no
    because visits were sporadic collection was difficult do did Parliament change the act - yes
     
    Last edited: Oct 19, 2011
  37. Bartelby

    Bartelby G.O.A.T.

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    In the Agassi case, Nike and Head were the companies solely involved so Nike and Babolat in Nadal's case.

    The fact is as well is that Agassi lost the appeal five years ago, so this tax is not the immediate cause of Nadal's departure.
     
  38. Bartelby

    Bartelby G.O.A.T.

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    4. Special rules for performing artistes: Art. 17 OECD Model
    The member countries of the OECD have decided in the 1960s to create an exceptional rule for
    performing artistes (and sportsmen). They need to pay income tax in the country of perfor-
    mance, regardless of the general rules for companies, self-employed persons or employees.
    This is mentioned in the special Article 17 of the OECD Model Tax Convention. Main reason for
    this special treatment is that top artistes and sportsmen are very mobile and can easily move
    their residency to a tax haven such as Monaco, which levies no income tax. The OECD believes
    that without Art. 17 (and the taxing right for the source country) these top artistes and
    sportsmen would escape from taxation under Art. 7.

    5. Elimination of double taxation: Art. 23 OECD Model
    To eliminate double taxation the OECD recommends in Art. 23 OECD Model that the residence
    countries allow its artistes a tax credit for the foreign source tax. Most countries have followed
    this, also continental European countries, only some countries prefer to use the exemption me-
    thod for artiste performance income that may be taxed under Art. 17.
     
  39. origmarm

    origmarm Hall of Fame

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    Very interesting. Many thanks for digging this out.
     
  40. batz

    batz G.O.A.T.

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    I'm always happy to be educated - nice research mate.

    I still think there must be a de facto waiver for team sports though - no way are all those guys who visit the UK paying a slice of their boot deals to HMRC.
     
    Last edited: Oct 19, 2011
  41. Bartelby

    Bartelby G.O.A.T.

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    If you look around every sportsman under the sun is upset about this, due in part to the rising UK tax rate, and they're not coming in droves.

    I think they'll modify it eventually but not in the current climate.
     
  42. CDestroyer

    CDestroyer Professional

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    Is that a picture of you with the hat on?
     
  43. Bartelby

    Bartelby G.O.A.T.

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    No. I just like the hat.
     
  44. Bartelby

    Bartelby G.O.A.T.

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    This is me with my machine gun:


    [​IMG]
     
  45. origmarm

    origmarm Hall of Fame

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    I believe that's fashionable bigot Galliano out and about
     
  46. CDestroyer

    CDestroyer Professional

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    Man she is nasty! Not in a good way.
     
  47. omigod

    omigod Rookie

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    The Telegraph

    13 Jul 2010
    'Stupid Agassi tax rule prevents Usain Bolt from running'
    http://www.telegraph.co.uk/finance/...ax-rule-prevents-Usain-Bolt-from-running.html

    18 Mar 2004
    Agassi aced over UK tax liabilities
    http://www.telegraph.co.uk/news/uknews/1457090/Agassi-aced-over-UK-tax-liabilities.html

    I have a feeling Nadal was talking much bigger sum than 30k.
    Now that players have huge endorsement deals may be the balance is not right.
     
  48. Bartelby

    Bartelby G.O.A.T.

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    It's a Thatcherite neo-liberal tax designed to capture the tax-haven seekers of the world.

    It can be easily tweaked to avoid the main problem by taxing at a per diem rate, rather than a pro-rata percentage of total events played in a tax year.

    For example, if Nadal plays three tournaments in Britain out of 24 the tax is 3/24, if he plays just Wimbledon it's 1/24.

    The reality is that they are going to lose more than they gain if it's now tweaked, but they won't do it soon.

    If he earns 10 million a year from nike and babolat, that's a big difference.
     
    Last edited: Oct 19, 2011
  49. Bartelby

    Bartelby G.O.A.T.

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    Fashionable people are obnoxious when they're drunk.



     
  50. omigod

    omigod Rookie

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    I thought the current system already takes into account the time spent in UK?

    Nadal Declines To Play in UK Tourney, Citing Tax Laws
    http://www.forbes.com/sites/kellyph...clines-to-play-in-uk-tourney-citing-tax-laws/
     

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