According to FOX News, they could be liable for up to 30% in taxes. Earnings generated by athletes in the US, or through activities conducted in the country, are typically subject to taxation by the Internal Revenue Service (IRS) unless reduced by a tax treaty.
Although Spain has a double taxation agreement (DTA) with the United States, its effectiveness in reducing taxes on prize money remains uncertain. In contrast, more than half of the teams qualified for the FIFA World Cup lack such agreements and may forfeit a significant portion of their earnings to US taxes.
Only 18 out of 48 qualified nations have tax treaties with the US, which exempt national football associations and their official delegations from paying federal taxes on tournament income.
Teams from Spain, England, France, Germany, Italy, and various other European nations stand to benefit. Besides the co-hosts, Canada and Mexico, the only non-European nations with signed DTAs are Australia, Egypt, Morocco, and South Africa.
Countries like Brazil, Argentina, Japan, South Korea, Senegal, Nigeria, Haiti, Curaçao, and Cape Verde are anticipated to incur higher tax liabilities on their tournament earnings in addition to their home country taxes, depending on local laws.
The exemption does not extend to players’ earnings, who will still owe taxes on their personal income in the US, regardless of their nation’s treaty status. Nevertheless, the exemptions assist football associations, coaches, and support staff in avoiding additional federal tax burdens.
For teams from nations lacking a US tax treaty, the financial implications could be significant. California has a top state income tax rate of 13.3%, while New Jersey’s is 10.75%. Florida, which is hosting matches in Miami, imposes no state income tax.
The federal corporate tax rate in the United States stands at 21%, with top individual earners liable for up to 37% in federal income tax. Some states may impose additional taxes, although Florida does not charge state income tax for the seven games taking place in Miami.
Tax consultant Oriana Morrison noted to The Guardian that this disparity disproportionately impacts smaller football nations.
“The teams from more developed jurisdictions with tax treaties with the US, like England and Spain, will face much lower costs compared to smaller countries such as Curaçao and Haiti,” she stated.
The issue also extends to prominent individuals. Brazil’s head coach Carlo Ancelotti is expected to have tax obligations in both Brazil and the United States, while England’s manager Thomas Tuchel will only incur taxes in the UK. Thanks to the UK-US tax treaty, he will avoid additional taxation on federation payments in the US.
