The concept of tax is as old as mankind itself and had taken different shapes and dimensions dating back to the earliest primitive period to the present modern time. It should be noted that there is no legislative definition for tax; hence there has been various definitions and meanings given by various authors. Tax has been defined as a fee  charged  by a  government  on  a  product,  income  or  activity. Tax is defined as “the compulsory exaction of money by a public authority for public purpose or raising money for the purpose of government by means of contribution from individual persons.”

Already since ancient times, sport has played an important role in human life, providing health and social benefits, entertainment and leisure. Competitions and championships, inherent in the pursuit of sport, have always attracted athletes and spectators alike, as celebrations of universal values, fair competition and human skills. However, it soon became apparent that athletic meetings may also serve as an effective political, sociological and marketing tool, given their enormous potential to communicate messages to a mass audience. Sports mega-events, such as the Olympic Games and the soccer World Cup, are now a powerful business machine, fueled by modern media and generating huge revenues. At the heart of this phenomenon are athletes who can derive significant benefits from participating in the sports events. The types of income that the players receive from competitive sports, and related tax implications, are the most complex and diverse in the case of international events involving numerous athletes from various countries.[1]

Article 17 of the OECD Model Tax Convention on Income and on Capital adopted by the Organisation for Economic Co-operation and Development (OECD) as it read on 22 July 2010 (the “OECD Model”) provides for the taxation of international athletes. This provision provides a special rule for the allocation of taxing rights, which only applies to performing artists and sportsmen. With respect to Article 17(1) of the OECD Model, income derived by a resident of a contracting state obtained as an entertainer, such as a theatre, motion picture, radio or television artist, or as a musician or sportsman, from his personal activities as such exercised in the other contracting state, may be taxed in that other state. Article 17(2) of the OECD Model states that if the income in respect of personal activities exercised by an entertainer or sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, then that income, notwithstanding the provisions of articles 7 and 15, may be taxed in the contracting state in which the activities of the entertainer or sportsman are exercised.

The primary right to tax certain income of athletes falls to the state of performance of sporting activities (taxing state) even if businesses in some other states are not performed through a permanent establishment situated therein, to which income covered by article 17 of the OECD Model may be attributable. Similarly, income of an athlete who provides services in the form of employment is taxable in the taxing state, regardless of the length of stay of the athlete in that country, and regardless of who bears the costs of remuneration. This means that the 183-day rule resulting from article 15(2) of the OECD Model does not apply in the case of sportsmen. In their bilateral relations, most countries use article 17 of the OECD Model when they negotiate agreements on the avoidance of double taxation. By including an equivalent of article 17 in a double tax treaty, the source state can protect its taxing right that often would be excluded in the light of the general principles laid down in articles 7 and 15 of the OECD Model, due to the fact that sports events typically do not require a prolonged presence in the state of performance.[2]

The consequence of double taxation is to tax certain activities at a higher rate than similar activity that is located solely within a taxing jurisdiction. This leads to unnecessary relocation of economic activity in order to lower the incidence of taxation, or other more objectionable forms of tax avoidance. The problems that double taxation presents have long been recognized, and with the growing integration of domestic economics into a world of economy, countries have undertaken several measures to reduce the problem of double taxation.

Article 17 of the OECD Model allows the taxing state to impose tax in accordance with national law. This provision does not contain any restrictions regarding the tax base, tax rate or tax collection forms. Moreover, it lacks the rules on deductibility of expenditure. All of these elements are left to the national tax laws of the taxing state. As part of its internal system of tax on personal income, the country may also waive the right to tax athletes at source or design friendly tax regimes for particular sporting events. In the light of article 17, the residence state of the athlete also retains the formal right to tax. This provision constitutes an open distributive rule, which indicates that the income “may” be taxed in the taxing country, but fails to grant that state the exclusive right to collect the tax. The issue of taxation of income from sports activities in the country of residence thus remains open, which means that if the taxing state grants certain tax exemptions for athletes, and the state of residence exempts income from tax under national law or an agreement on the avoidance of double taxation, it may result in double non-taxation. If both states use their taxing rights, the necessity to grant the exemption by the residence state or permit the deduction of the tax paid at source from tax payable in the country of residence depends on article 23A or 23B of the OECD Model. These regulations give rise to numerous problems of interpretation and practical difficulties even in the case of cross-border activities of individual athletes, and international multi-participant sports competition raises doubts that call into question the appropriateness of the tax treatment model proposed by article 17 of the OECD Model, based on unlimited taxation at source.[3]

Given the current situation of the taxation of international atheletes as brilliantly enunciated by the OECD, the writer is convinced that there is a need to review the OECD Model to ensure that international sports atheletes do not evade payment of tax either at the taxing state or the state of residence and also ensure that the international athletes are not subject to unnecessary taxation and in fact double taxation; hence the goose that lays the golden egg does not die.


[1] Tetlak, K: “Taxation of International Sports Men” (2004) ISBN 978-90-8722-239-0 available at www.ibfd.org/IBFD-Products/shop

[2] Ibid

[3] Ibid.

About the author

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Ayomide Adesemowo

Ayomide Oluwatobiloba Adesemowo is a sports lawyer with keen interest in sports governance and administration. He is the business and management strategist at Lagos Tigers Football Academy in Lagos Nigeria. During his leisure, Tobi loves to research on sports related issues.

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