Report Seminar Sport and taxes of 13 December 2006
Nolot organised on 13 December 2006 its Fourth Seminar on Sports and Taxes (this time in Dutch). The seminar was chaired by Mr, Paul Foortse of Limperg Sports Management in Bussum. The focus was mainly on international tax developments from a Netherlands perspective for professional soccer players. Also cyclists and other athletes were represented.
The first speaker was Dr Dick Molenaar from All Arts Tax Advisors in Rotterdam. In his PhD study he has proved that the budgetary revenue from the Netherlands tax regime for professional artists and sportsmen is rather limited, certainly when set-off against the administrative burdens for event organisers and the advisors of artists and sportsmen. His arguments convinced the Netherlands Government that indeed this special tax regime could be abolished, and per 2007 this levy is in most situations no longer applicable. Molenaar set-out the main rules as they apply from 2007.
Mr. Jeroen Meeboer of Foros Advies in Amsterdam dealt with wage tax issues. There is quite some Netherlands case law on the application of the 30% income tax regime (under which 30% of the gross salary may be paid out as tax-free reimbursement of ? fictitious ? costs) in particular to young foreign soccer players. Another important theme for foreign soccer players is the Netherlands CFK fund. This is a type of deferred income system, under which professional soccer players must pay approximately 50% of their gross salary into a fund. For tax purposes the fund and the payments there out are not to be treated as pension (despite the similarity in its appearance). The system used to be obligatory for all players residing in the Netherlands, but since some years players that are eligible for the 30% income tax regime may opt to stay out of the CFK system. Finally, there was some discussion on the appropriate tax treatment of up-front payments to newly contracted players.
Wiebe Brink of Ernst Young in Utrecht also mentioned the CFK system. Ernst & Young has recently investigated and ranked the tax treatment of professional soccer players in many European countries. The position of the Nederland was rather good, mostly because of the CFK fund. Nevertheless, an attention point is that for the rather few top players and for incoming foreign high/earning players the obligatory character of the fund is not always understood or desirable.
Then there was a discussion of whether it is in the Netherlands tax system possible to utilize image rights as a tax planning tool. Different from the situation in other countries, this is in the Netherlands a very tricky adventure. There have been a few Court cases, which were all unsuccessful for the players in question. Although the general feeling seems to be that these cases were examples of not well-implemented and executed, Netherlands tax practitioners are very reluctant to implement image rights structures in the Netherlands.
Mr. Wim Nan of Loyens & Loeff Amsterdam dealt with the Conclusion of the Advocate-General to the Netherlands Supreme Court Van Ballegooijen concerning the scope of tax treaty provisions such as Article 17 of the OECD Model. The main issue before the Court is whether Article 17 is applicable to the basic salary of a sportsman. The Court of ?s-Hertogenbosch has held that it is applicable regarding a soccer player and a cyclist, whereas the Court of Amsterdam has held that the Article is not applicable to the basic salary of a professional ice skater. The A-G took the side of the Court ?s-Hertogenbosch, now the decision of the Supreme Court needs to be awaited.
Then Mr. Nan discussed the possibility for foundations to prevent the taxation of the results of sports events that are organised in the Netherlands. By having the Foundation setting up a BV, and subsequently making use of the possibility in the Netherlands Corporate Income Tax Act to deduct from the taxable profit distributions made to the Foundation, taxation of a positive result from the sports event may - under certain conditions - be prevented altogether.
Dr. Dick Molenaar en Rijkele Betten then discussed several international developments. Molenaar discussed the ECJ Gerritse en Scorpio cases. All EU Member States will have to bring their legislation in line with these decisions. Betten remarked that while the Netherlands is abolishing its tax regime for foreign artists and sportsmen, other countries such as Australia and South Africa are introducing and/or strengthening their tax regime for these persons. Then some interesting Belgian case law on the withholding obligations for the organiser of a motor cross sports events was discussed, and the well-know Agassi case law in the United Kingdom.