This summer will see Birmingham host the 2022 Commonwealth Games and it is estimated that around 15,000 non-UK resident competitors, athletes and officials will arrive in the UK in order to participate.
As the world gradually returns to a “new normal” following the coronavirus pandemic, with travel and quarantine restrictions generally being eased, it is hoped that international sporting events such as this will once again start to fill the sporting calendar. As such, the tax treatment of internationally mobile athletes and competitors (and officials) will become increasingly relevant.
The UK government has stated that it is committed to ensuring the UK continues to be an attractive location to host international world-class sporting events. The granting of an income tax exemption supports this objective, particularly where such an exemption is a condition of the bidding process to host the event.
Most recently, an income tax exemption was a condition of the successful UK bid to host the UEFA Champions League Final 2017 in Cardiff and matches at the UEFA Euro 2020 finals tournament.
In the absence of an income tax exemption (and subject to the terms of any applicable double taxation treaty) non-UK resident individuals might be fully taxed on their income arising in connection with the 2022 Birmingham Commonwealth Games, and non-UK resident athletes and sportspersons would also be taxed on a proportionate share of their worldwide sponsorship income. Furthermore, payers of income to those non-UK resident athletes and sportspersons would be liable to withhold UK tax from their payments. Taken together, this would make the UK far less attractive as a host for international sporting events.
The granting of an income tax exemption was a condition of the bidding process for all countries seeking to host the 2022 Commonwealth Games. The city of Birmingham bid to host the 2022 Commonwealth Games on the basis that the UK government agreed to providing an income tax exemption if it was successful.
The Major Sporting Events (Income Tax Exemption) (2022 Birmingham Commonwealth Games) Regulations 2022 provide for an exemption from income tax on income earned in the UK by certain non-UK resident individuals in connection with the 2022 Birmingham Commonwealth Games.
The exemption applies to income received by non-UK resident “accredited competitors and officials” for relevant duties or services performed in connection with the 2022 Birmingham Commonwealth Games provided that the income arises in respect of duties or services performed in the UK between 1 July and 11 August 2022 inclusive. Those individuals may still be liable to tax on this income in the countries in which they are resident.
“Accredited competitors and officials”, i.e., those who benefit from the UK tax exemption, are defined as any individual who has been accredited in advance by the Organising Committee, including:
- an employee, official or contractor of a national sports council, including, for the avoidance of doubt, a competitor listed in the 2022 Birmingham Commonwealth Games competitor list;
- an employee, official or contractor of the Organising Committee, including an event official; and/or
- an employee or contractor of a broadcast, commercial or media organisation working with the Organising Committee for the purposes of the 2022 Birmingham Commonwealth Games.
This income tax exemption is not a given for all sporting events but is considered on a case by case basis with reference to the government’s criteria, where the event is of ‘world-class status, internationally mobile and where exemption by the host country is a requirement of a bid to host the event’. The Birmingham 2022 Commonwealth Games more than fulfils the necessary criteria and is a once-in-a-lifetime opportunity to showcase the West Midlands on a global stage.
Should you require any specific advice around these issues then please do not hesitate to contact the Brabners sport sector team.
