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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    Yes, but if he spends 28 days out of 365 in Britain that is somewhat less than 3/24 of his total global sponsorship income that can be taxed.

    Maybe they could also lower the rate of tax as well.



     
  2. Bartelby

    Bartelby G.O.A.T.

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    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).
     
  3. Bartelby

    Bartelby G.O.A.T.

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    Recent US case (HLB):

    The U.S Tax Court recently decided Goosen v. Commissioner, 136 T.C. 27 (June 9, 2011), a case with potentially far-reaching implications for foreign athletes who compete within the United States.

    In Goosen, the Tax Court examined the worldwide endorsement income earned by a nonresident professional golfer and held the following:

    The taxpayer's income derived from contracts requiring him to use and wear a sponsor's products during tournament play is properly categorized as 50-percent personal services income and 50-percent royalty income.
    The taxpayer understated the amount of U.S.-source royalty income generated from the endorsement contracts
    A portion of the U.S.-source royalty income earned from the endorsement contracts was effectively connected with the taxpayer's U.S. trade or business of playing golf.

    While this decision leaves some unanswered questions, it instantly becomes the leading authority for determining both the character and source of the endorsement income earned by international athletes.
     
    Last edited: Oct 19, 2011
  4. Bartelby

    Bartelby G.O.A.T.

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    Analysis of Goosens by Rubin:

    Item: Prize money from U.S. golf tournaments and appearance fees in the U.S.

    Character: Effectively connected income from a U.S. trade or business.

    Item: Off-course endorsement agreement payments (that is, the ability of the sponsor to use Retief’s name and likeness in advertising and product promotions).

    Character: Royalty income, per Retief’s ownership interests in his name and likeliness. As to royalty income relating to golf card and video game sales, these were sourced in the U.S. based on the percentage portion of U.S. sales of those items to worldwide sales. Allocating by the relative amount of advertising conducted for such items inside and outside the U.S. by the sponsors was rejected by the court. Royalty payments attributable to on-course and other endorsement agreements were treated as 50% U.S. source based only on a general analysis of various markets of the sponsors.


    Item: On-course endorsement fees and bonuses, relating in large part to wear or use sponsor products while playing golf.

    Character: Personal services income, which are sourced by where the services are performed. However, some of the contracts combined such on-course use of products with the ability of the sponsor to use Retief’s name and likeness. Such contract payments were thus considered to be partly personal services income and party income from royalties, with the court being forced to make some type of guestimate allocation between the two.

    Item: U.S. source royalty income from endorsements – effectively connected with a U.S trade or business?

    Character: As to on-course endorsements, which were tied to and required Retief to play in golf tournaments, Retief’s participation was material to his receiving such income and is treated as income effectively connected with a U.S. trade or business. As to off-course endorsements, these were not dependent on tournament play or Retief’s presence in the U.S. These were thus determined to be non-effectively connected income, subject to 30% tax as FDAP income.
     
    Last edited: Oct 19, 2011
  5. origmarm

    origmarm Hall of Fame

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  6. Bartelby

    Bartelby G.O.A.T.

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    What is less well known is that — according to a confidant of his, whom the Mail talked to this week — the designer loved to emphasise his own Jewish ancestry.

    Perched in La Perle, mojito (his preferred cocktail) in hand, Galliano would tell anyone who listened about the melting pot of his heritage.

    He always insisted he had Jewish blood from the Sephardi Jews who came from Spain and Portugal in the 19th century.

    Johnny is obsessed with the idea of being descended from Jews,’ the confidant, who often drank with him at La Perle, reports. ‘He was brought up a Catholic, but has always been aware of the influence Jews have had on his life.

    ‘Johnny was particularly fascinated by the fact that couture in Paris was traditionally a Jewish industry.’

    He added that, when sober, Galliano spoke authoritatively about the Holocaust, and particularly about the fact that thousands who worked in the fashion business in Paris were murdered by the Nazis.

    ‘Johnny knows that Paris designers were exterminated systematically by the Nazis in living memory. To me, the freaky language in a Paris bar was just nonsense — an attempt to shock strangers in bars.'
     
  7. NLBwell

    NLBwell Legend

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    Sorry, didn't see that you said he should go to Halle.
     
  8. dParis

    dParis Hall of Fame

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  9. Bartelby

    Bartelby G.O.A.T.

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    You can be cruel.


     
  10. stringertom

    stringertom G.O.A.T.

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    Usually the benefits of a whining baby are quite limited...in this case, we have a new venue for another Fedal match. Of course, we have to hope they both play Halle and advance to the finals.
     
  11. Bartelby

    Bartelby G.O.A.T.

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    Yes, Fed and Nadal at Halle is a good deal, although after the FO and before W is not an ideal time for a match.
     
  12. namelessone

    namelessone Legend

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    Actually it will be a good test for both, as it's a match in a 250 event. Irrespective of their performance in the clay season, they can test eachothers grass form at the moment, before the potential big meeting in SW19.
     
  13. origmarm

    origmarm Hall of Fame

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    That's awesome!

    I had read this also at the time (one of my good friends left finance to study at Central St Martins recently so I've heard a lot about this world of late) but I'm not sure what to make of it.

    It sounds to me honestly like he was probably going for shock factor yes and he seems to have been quite conflicted about his ancestry and his life so far. He seems quite a troubled guy in general, whether it be in this regard or just generally in his life.
     
  14. stringertom

    stringertom G.O.A.T.

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    Without enlarging the avatar for detail, I had thought it was an image of Joni Mitchell...she has had a penchant for the pulled-down fedora look.
     
  15. jackson vile

    jackson vile Legend

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    Sounds pathetic calling it a 250 tournament doesn't it?
     
  16. NLBwell

    NLBwell Legend

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    Can you imagine trying to do your taxes yourself and have to figure out what percentage of each employer's sales were in which country and also try do divide up what percentage of your income was from royalties versus personal services?
    These guys spend tons of money on accountants and lawyers and still get sued by the IRS.
     
  17. jonnythan

    jonnythan Professional

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    What on earth makes the UK government think it's entitled to money foreigners own while overseas??
     
  18. stringertom

    stringertom G.O.A.T.

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    I assume you mean "earn" instead of "own".

    While I agree the rates are excessive, understand each player entering any country hosting a tournament utilizes services provided by the government...air traffic controllers, the airports themselves, and all the infrastructure necessary to commute after disembarking. Don't you think something should be levied to foreigners earning money while visiting another country?

    I am reminded of a conversation I had with a major league baseball player here in the US. He explained he had taxes levied against his earnings by each individual US state he traveled to during their long 162-game regular season. He particularly disliked playing in NY because he got the state AND city levy.
     
  19. rommil

    rommil Legend

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    I though Rafail is the people's champion......... He should just play Queens and Babbette, batz, Mustard et al can benefit from his contribution.
     
  20. Bartelby

    Bartelby G.O.A.T.

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    Both the UK and the US levy this tax.

    You pay tax on sponsorship income where its earned, not where the cheque comes from or is banked.

    It was the latter principle but it was a tax dodger's licence.

    Goosens was advised to collect his cheques in Lichtenstein as a consequence of the law being this way so he paid no one any tax.

    The new principle both in US and the UK is that if youre promoting a product in a market then youre earning income in that market.

    Its a sensible policy, but the rate and how it's levied can be argued.



     
  21. dParis

    dParis Hall of Fame

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    It's poor principle and overreaching policy. Now Nadal won't be there promoting watches, clothing, gear, etc. resulting in fewer of those items being sold in that particular market - and less tax revenue generated. Kudos to the British government for shooting itself in the foot - and getting shrap in the eyes of the local retailers.
     

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