Great Britain Pays, Athletes Play

August 1, 2012 — 2 Comments

There has been a lot of talk about the cost of the Olympics and what the impact has been on London financially.  There has also been a lot of talk about the cost Olympians have paid in order to compete in London athletically.  But something that has not been talked about as much is the financial cost to the athletes themselves.

Fortunately for the athletes their sole focus remains on their events because for them, this is a tax free event.

Yes, you read that correctly. Olympians at the games are getting a nice tax break under an exemption passed just for the London 2012 games. If not for the exemption, those at the games would have had to pay some pounds to play.

You see, the Brits, like the U.S., have a tax system that attempts to tax global income. Under British tax law, the amount of tax due is pro-rated based on the number of events that an athlete competes in inside the country; this is in addition to a 50% tax rate on appearance fees. If, for example, an athlete participates in ten athletics events in 2012 and one of those events is located in the UK, the Brits take the position that they are more or less entitled to 1/10 of that athlete’s worldwide income (some exceptions apply but you get the idea). The tax is imposed even though the athletes may not live in Britain.

The law has kept big names like Spanish golfer Sergio “El Nino” Garcia and Rafael Nadal out of the country for a number of events. Those omissions made sports news but didn’t make many waves beyond their individual sports. The Olympics, however, is on a completely different scale: you can’t have a competitive Olympics unless athletes from all over the world actually show up – and attendance was threatened by these tax laws.

Last year, Jamaican sprinter Usain Bolt famously declared “I am definitely not going to run [in London]” until the Olympics because of what he viewed as punitive tax laws. His declaration sent the country as well as the rest of the world into a tizzy, worrying that other athletes might make similar proclamations and then potentially even worse, follow through on said proclamations.

In order to stem any controversy, the British taxing authorities agreed to a limited exemption to the tax rule. The exemption covers those athletes who are visiting the UK in order to compete in the Olympic Games and a limited number of people who are visiting the UK to work on Games-related activity.  Exemptions also apply to certain non-UK residents working for broadcasters. But not everyone gets a break: those working on construction of the venues (UK residents and non-residents) will have to pay taxes just as always.

Many of the athletes at the Olympics work at something other than their sport for a living. But those that compete professionally – like our American basketball team and many of the world’s best soccer (er, football) players – were especially concerned about forfeiting taxes in order to compete in the Games.

Now, they don’t have to. Lucky them.

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

Trackbacks and Pingbacks:

  1. The Price Olympians Pay « The Joy of Tax Law - August 3, 2012

    […] had been controversy leading up to London Games regarding Britain’s stringent tax laws, which ordinarily take a large cut of the global income of any international athlete competing on […]


  2. Great Britain Pays, Athletes Play « The Joy of Tax Law | Tax Attorney - August 1, 2012

    […] the original post here: Great Britain Pays, Athletes Play « The Joy of Tax Law Segnala presso: This entry was posted in Uncategorized and tagged been-on-london, cost, […]


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