Who’d have thought that tennis would be so taxing, and Andorra so boring?

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As it’s exactly one month before I leave for Melbourne for my annual Australian Open tennis fix, my thoughts turned to tax and tennis. Is there any connection other than tax planning?

A fair number of high-profile tennis players, renowned for hitting the lines, have also hit the headlines for tax reasons. Former world number one Arantxa Sanchez-Vicario was served with an order to pay income tax of around €3.5 million by the Spanish Supreme Court on 10 December.

The ruling covered the five years between 1989 and 1993 when it was found that Sanchez-Vicario had been a resident of Spain rather than of Andorra as she had claimed. According to a court statement ‘She never effectively lived in Andorra and she never had the intention to live there either.’ (Poor little Andorra – Arantxa was obviously not that keen on shopping).

One commentator (rather tartly) remarked that while Goran Ivanisevic took his 2001 Wimbledon trophy home to Croatia, he took his winnings to Monaco.  According to the Guide to the Principality ‘the main principle of Monaco’s fiscal system is the total absence of direct taxation’ for most residents. Current top twenty male players resident in Monaco include Novak Djokovic (Serbian and ranked world number 3), Robin Söderling (Swedish and ranked world number 8), Radek Stepanek (Czech and ranked world number 12), Marin Cilic (Croatian and ranked world number 14) and Tomas Berdych (Czech and ranked world number 20). Juan Monaco, the Argentinian tennis player, is resident in Buenos Aires.

Conversely, Swiss ace Roger Federer may live in a tax haven, but as a Swiss citizen he doesn’t qualify for the (tax) breaks available to foreigners living in Switzerland. No joy for him with his returns then.

In 2000 the UK Revenue assessed Andre Agassi on sponsorship income his US company received outside the UK from Nike and Head for endorsement deals. Agassi was neither resident nor domiciled in the UK although he did play in the UK during the period. In one of his less successful court outings, Andre finally lost his case in the House of Lords in 2006 on the grounds that foreign entertainers and sportsmen who received payments in connection with commercial activities in the UK are subject to UK income tax on them. Two other players had also been taxed on similar grounds, but as they did not appeal from the decision of the Special Commissioners they remain anonymous as Mr Ball and Miss Deuce. Good job they weren’t badminton players!

By the way, for UK VAT purposes grass seed is zero-rated but turf is taxable at the standard rate.

Tax lawyer specialising in business tax, SDLT and VAT

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