Games / races / training camps in Spain? Spanish tax authorities announce wave of tax audits also affecting Belgian football players and cyclists

#taxaudits #nonresident #spain

Thursday, 26 March 2020  - In January of this year the Spanish tax authorities issued their General Strategic Plan for Taxation and Customs Control for 2020. This resolution announced an increased number of tax audits relating to non-resident athletes participating in sports events taking place in Spain. The announcement is expected to have a big impact on the sector once events start picking up again post Covid-19 crisis.

Background

In accordance with the double tax treaties mirroring the OECD Model Treaty signed by Spain, a non-resident athlete is taxable in Spain on the income derived from the sports activities performed there. Consequently, Spain is entitled to levy taxes on the corresponding income received by foreign athletes participating in games / races / training camps within the country.  

In practice, however, numerous athletes and event organizers neglect to meet their Spanish tax obligations and although the Spanish law has not changed, the Spanish tax authorities have now announced they will apply stricter criteria when enforcing the Non Resident Income Tax Law under the international agreements. This entails an increased number of tax audits aiming to levy tax on all income directly related to athletes’ activities performed in Spain.

"The Spanish tax authorities have now announced they will apply stricter criteria when enforcing the Non Resident Income Tax Law under the international agreements."

Who is targeted?

The envisaged measures can affect all non-resident athletes performing activities in Spain:

• Belgian football players playing CL / EL games or participating in training camps in Spain;
• Belgian cyclists participating in races (Vuelta, Clasica San Sebastian, etc.) or individual / collective training camps in Spain;
• Belgian tennis players participating in tournaments in Spain;
• Etc.

The Spanish tax authorities intend to collect relevant information on participants from promoters, organizers and other stakeholders of the sporting events.

Which portion of income is taxable in Spain?

Spain is entitled to tax not only the specific remuneration (game bonuses, etc.) linked to the events, but can also levy taxes on the relevant portion of the base salary of the team athlete.

"Spain is entitled to tax not only the specific remuneration (game bonuses, etc.) linked to the events, but can also levy taxes on the relevant portion of the base salary of the team athlete."

Guidelines for the apportionment of the base salary based on the activities performed abroad can be found in the OECD Commentary on article 17 of the OECD Model Treaty. To this date, the Spanish tax authorities have not officially confirmed they are planning to align with these criteria, nor have they established a mechanism to calculate the proportion of income that should be attributed to Spain. The authorities have, however, already informally pointed out their preference to use the criteria of the number of events (i.e. matches, races...) that are held in Spain within each competition. For example, if the motorbike GP championship has 20 races and 4 are held in Spain, then non-resident participants would be taxed in Spain on 20% of their income.

Atfield will keep you updated on this topic and can assist Belgian athletes performing competitive or training activities within Spain in reviewing their situation and ensuring compliance with Spanish tax legislation.

For questions, please contact Daan Buylaert or Kimberley De Plucker.

Daan Buylaert (This email address is being protected from spambots. You need JavaScript enabled to view it.)

Kimberley De Plucker (This email address is being protected from spambots. You need JavaScript enabled to view it.)

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