Guest Column By Debra Callicut Partner Henry & Horne, LLP
It has been reported that Usain Bolt turned down an opportunity to run at a UK athletics event as the tax he would suffer filing as a nonresident earner of the UK could have potentially exceeded his UK earnings.
The reason behind this apparent unfair tax result is that the UK will tax not only the athlete’s winnings in their country, but they will also tax a portion of the athlete’s worldwide endorsement income. This rule is made more burdensome by the fact that the allocation is based on the number of days the individual performs in the UK vs the total number of days he performs in the year, training days are not included.
You can imagine that such news would not be welcomed by those who are looking to perform in the UK in the next Olympic trails. It does, however, appear that a special exception to this rule will be made for such athletes. Once any taxing regime starts to make special exceptions, it is a very slippery slope to that such regime creating a very convoluted and complex tax structure. The UK need only look over the pond and see the negative effects and unintended consequences to taxpayers who must live with a tax system which is riddled with exceptions and unnecessary complex regulations.
For those athletes who are not deterred and will travel to the UK for an event or performance, we can recommend a highly qualified local tax firm to help you navigate your way.
Debra A. Callicutt, a Partner in the Scottsdale office of Henry & Horne, specializes in International Tax Consulting. She provides consulting and advisory services to her clients by structuring advantageous outbound and inbound investments and meeting their foreign reporting requirements. Debra is an active participant in the international group of Leading Edge Alliance, the second largest accounting network in the world, and has served as an expert in her field. She worked in the international tax department of national public accounting firms prior to joining Henry & Horne in 1993. She can be reached at 480-483-1170 or by email at: DebraC@hhcpa.com.