World Cup Tax Litigation

“8 Soccer Players At The World Cup Who Have Been Caught Up In Tax Scandals” (Forbes) is World Cup news that Americans can understand.

One interesting angle is that value-added tax can be collected on a human:

In 2014, Spanish tax authorities set their sites on another soccer transaction: Luis’ move from Deportivo La Coruña to Atletico. The transaction was subject to value-added tax (VAT)

Buried at the very end is an explanation for why the litigation is so often with the Spanish government:

Years ago, the so-called “Beckham Rule” was made law in Spain to allegedly benefit England’s David Beckham, who moved to Spain to play for Real Madrid. Under prior Spanish law, you could elect to be taxed as a nonresident if you lived and worked in Spain, if you met certain criteria. The law was short-lived and wrapped in 2010 (perhaps, not coincidentally, after Beckham left Spain). Most of the recent allegations aimed at soccer players have their beginnings in 2011 and after.

I wonder if any of this is reasonable. Consider the Brazilian who plays soccer in London on behalf of a team in Spain… why does he or she pay income tax only to Spain? In the U.S., for example, professional sports team players have their income apportioned to the states where games were actually paid (See Why isn’t the Super Bowl always in a tax-free state?). Maybe they also do that in Europe, but these licensing deals and then taxed only in the country of official residence? But the licensing deals wouldn’t exist without the games being played.

European readers: Can you try to explain to us Americans why the World Cup is worth watching?

Related:

  • “Taxation and International Mobility of Superstars: Evidence from the European Football Market” (December 2009 draft from London School of Economics and UC Berkeley, Klevin, Landais, and Saez): “the level of top earnings tax rates has a large and significant impact on the migration decisions of football players. …  The large tax induced migration effects we uncover translate into significant effects in the performance of football clubs across countries.” (i.e., when you watch the World Cup you are actually seeing competition among tax codes)

6 Comments

  1. SuperMike

    July 7, 2018 @ 1:55 pm

    1

    The world’s most highly paid serfs!

  2. Alexey

    July 8, 2018 @ 8:49 am

    2

    Minor nit:

    > when you watch the World Cup you are actually seeing competition among tax codes

    No, the taxes were about moving between football clubs, not about national teams (which compete in World Cup).

  3. Reinhard

    July 8, 2018 @ 9:38 am

    3

    Trying to answer Phil’s question – with Europe in mind:

    It is probably a big difference if you watch a sporting event for which you know the basic rules, especially if you have performed the art yourself, in your youth.

    In Europe, there is soccer, and then nothing which could match with. All other kind of sport is much, much smaller. This is different to the USA where baseball, football and basketball are really huge.

    The own experience, and an understanding of what you see makes much of the attraction. If I’d see a baseball match, I would be terribly bored. Because “home run”, for me, is just a phrase from american movies. I don’t know a single rule. Accordingly, one who don’t know the soccer rules will just wonder why there are so few goals in a game, usually, not getting how difficult it is to achieve one.

  4. philg

    July 8, 2018 @ 11:27 am

    4

    Alexey: Forgive my ignorance, but the World Cup team from Spain, for example, might include players who ordinarily would play for teams that are based in London, Paris, Rio, and Cape Town? It is not a bunch of the best players who play for teams that are located in Spain itself?

    Reinhard: Baseball is dull even if you DO know all the rules 🙂

  5. wally

    July 8, 2018 @ 1:32 pm

    5

    philg: Correct, it’s no different than the Olympics. It’s about country of citizenship. For example, Manu Ginobli played for Argentina’s Olympic basketball team, but plays professionally in our NBA. Similarly, Deandre Yedlin is an American who plays for our national soccer team, but plays professionally for Newcastle United in the (English) Premier League.

    Of course our soccer team s$%t the bed and didn’t make the WC. No matter,
    WC still rocks!

  6. wrongthinker

    July 9, 2018 @ 2:54 am

    6

    Football is interesting if you play or played it yourself (as any other sport), if many people you are surrounded with are interested in it, or if you can identify with some nation playing.
    Sport as substitute for war, very nice (and short) essay by George Orwell (The Sporting Spirit):
    http://www.orwell.ru/library/articles/spirit/english/e_spirit
    valid today as much as then.
    Word Cup is event held only every 4 years, there is also some exclusivity, and there is really some interest in sport itself (because nothing else is going on), not as in Olympics where there is almost no notion about any sport itself, only about medal count for each country, so that nationalism in World Cup is more tasteful.
    Plus, there are not many goals (scores) in football, and there is some element of luck, sometimes David can beat Goliath, and it can be fun.
    And at the end, I can not resist: I never understood why American football is called football (it looks as some more brutal form of rugby), people don’t play it with their feet, they carry it in their hands, and kick it only on very rare occasions, and it is not even a ball, it is en egg.

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