Jude Bellingham, Jadon Sancho and their Real Madrid and Borussia Dortmund teammates will not have to pay any UK tax on earnings from the Champions League final at Wembley.
Bellingham’s Real Madrid and Sancho’s Dortmund this week booked their places in next month’s end-of-season showpiece in London by overcoming Bayern Munich and Paris Saint-Germain in the semi-finals.
Ordinarily, the UK levies income tax on earnings, including from image rights, bonus payments and endorsements, for any time that overseas-based athletes spend competing in Britain, for instance at Wimbledon or The Open.
But certain major events receive special exemptions, and the Champions League final has been added to a list that has previously included the London 2012 Olympics and Women’s Euro 2022.
“This will be a welcome relief for any non-resident individuals participating in the 2024 Champions League final,” said Lee Stott, Tax Partner at accountancy and advisory firm Azets.
“The UK is fairly unique when it comes to sporting events for non-UK residents as we deem the income earned from the events undertaken in the UK as taxable UK income, as well as any portion of income relating to a sportsperson’s image rights, bonus payments and endorsements.
“Non-resident football players and coaches are coming to the UK to carry out a ‘relevant activity’ – a sporting performance, in this case – and this is caught by the ‘Artistes and Sportsmen Article’ in the various tax treaties the UK has with countries around the world.
“For example, a Spanish footballer will be Spanish tax resident and therefore we look to Article 16 of the UK/Spain tax treaty. This says that income arising to a sportsman who is resident in Spain which relates to activities undertaken in the UK can be taxed in the UK.
“Therefore, a portion of the Spanish salary which relates to UK workdays would be taxable in the UK without this exemption offered by the Treasury. Non-playing staff are also exempt from tax under a different article under the tax treaties as employees, so do not require a special exemption.
“Most developed countries in the world have some form of tax regime which catches ‘Sportspersons and Entertainers’ and the UK’s version is called the Foreign Entertainers Unit (FEU) regime.”
The exemption will apply to Real Madrid and Dortmund players and staff for up to six days around the Champions League final on 1 June.