On Nov. 20, teams from 32 countries will kick off FIFA World Cup play in Qatar. The competition, which will run for about three weeks, marks the 22nd time that teams will play for the cup—the first official event was held in Uruguay in 1930.
Qatar World Cup Controversies
Traditionally, the World Cup takes place in summer, with the 2018 cup taking place in July. This year, the timing has changed because of Qatar’s heat—daily high temperatures in Doha reach around 106 degrees Fahrenheit and rarely dip below 100. Play will also be compressed into a shorter window.
The timing isn’t the only controversy in the tournament. There have been allegations of human rights violations against workers, criticisms of the country’s stance on LGBTQ+ rights, and concerns about the treatment of women.
Soccer Is Wildly Popular
Despite the controversies, soccer—called football globally—remains the most popular sport in the world. It follows that the World Cup generates billions of dollars, and this one is no exception. According to Bloomberg, the 2022 World Cup will top the previous high of $5.4 billion generated in 2018. That’s the result of more than 2 million fans expected to come in person. FIFA predicts that the games will reach an accumulated audience of 5 billion worldwide. In comparison, the Super Bowl LVI viewing audience was estimated at 208 million-plus.
World Cup Money
Money flows from ticket sales and other sources like television broadcasting, marketing, hospitality, and licensing rights. So where does all of that money go?
In most cases, it goes back to FIFA, which is organized as a not-for-profit association under Swiss law. However, FIFA notes that all profits generated by FIFA globally “remain subject to the ordinary taxation regime for associations in Switzerland.”
For 2022, FIFA will pay out $440 million in prize money. The winning team alone will pocket a whopping $42 million. The runners-up will take home $30 million, while third-place and fourth-place teams will earn $27 million and $25 million, respectively. Payouts continue based on placement. And each of the 32 teams gets a piece of the prize money—even those who finish in the bottom half will take home $9 million each. Each participating team also receives an advance of $1.5 million to cover expenses.
How does that trickle down to players? That can vary from country to country. Under a recent settlement in the US, the men’s and women’s teams pool the prize money from their respective World Cup appearances and split the total among the two teams and the federation. It’s the first federation in the world to do so.
Not all players choose to keep the money. Since many of them already make millions, they pass their salaries along. French forward Kylian Mbappe famously donated his 2018 winnings to charity; the entire English team reportedly did the same.
Professional clubs get a cut, too. As part of FIFA’s Club Benefits Programme, intended to recognize the contribution of clubs—in terms of training and playing time—toward the tournament, FIFA will pay out $209 million to 416 clubs. Clubs will receive approximately $10,000 per player per day while the player remains in the World Cup, including prep time. And the compensation is paid to all clubs the player has played in the two years before the World Cup 2022.
Tax Exemptions and the World Cup
Clearly, there’s a lot of money coming in—and flowing out. So what does all of this mean when it comes to taxes?
The easy part first: As noted, FIFA is generally exempt from tax. Even if the exemption didn’t extend outside of Switzerland, all host countries enter into agreements with FIFA as part of the bidding process. It’s a condition to host and requires the host country to guarantee the full support of government authorities at federal, state, and municipal levels.
While the details could vary from host country to host country, the tax pieces largely remain the same. For example, FIFA generally requires hosts to “limit taxation outside of Switzerland and facilitate fiscal procedures in the Host Country/Host Countries.” That’s because, as FIFA makes clear, any taxes imposed on FIFA and its subsidiaries “may limit FIFA’s ability to finance the organisation and administration of its statutory activities.”
A general tax exemption for FIFA and its subsidiaries includes all applicable taxes in the host country. An exception, as explained in the 2026 FIFA World Cup Bidding Process–Government Guarantees, applies to the sale of tickets to third parties and is limited to VAT, sales tax, or the like at a unified rate of a maximum of 10%. Fortunately for spectators, Qatar is one of only two Arab economies that doesn’t impose a VAT.
FIFA also expects an exemption from tax from the host country for third parties involved in the hosting and staging of the World Cup and related events. This includes the Host Association/Host Associations, the continental football confederations, the FIFA member associations, the host broadcaster, FIFA’s service providers, FIFA contractors, and certain individuals. Limited tax exemptions may also apply to broadcasters, contractors, and volunteers.
Players May Pay Tax
Unless otherwise exempt, players generally are subject to tax. However, taxation in the host country is limited to base compensation and prize money paid to the players by FIFA’s member associations for participation in the World Cup.
This year, 829 players from 42 countries will appear in the World Cup. That number differs from the 32 countries scheduled to play because players may live and play in one country but play for their home country in the tournament or have dual nationality.
Fortunately, Qatar is considered tax-favored. There is no personal income tax on employee salaries, wages, and allowances. Self-employed persons may be subject to income tax if their qualifying income is from sources in Qatar.
Players may still face tax bills in their home countries. The US has a global tax system, meaning that citizens and permanent residents must file and pay taxes on their worldwide income no matter where they live or earn their money. It may be possible to reduce the tax due through foreign tax credits, exemptions, and treaties. However, the US does not have a tax treaty with Qatar, and the exemption on sports winnings related to representing the US in competition granted in 2016 is limited to prizes or awards won in the Olympic Games or the Paralympic Games, not the World Cup.
The tax treatment of athletes can be tricky. They don’t always play or practice where they live—as in the World Cup. They may receive income from a variety of sources, including image rights. And their compensation may not be straightforward—transfer fees, anyone? Add in complications that extend to a global event, including exceptions and special treatment, and it’s a lot. It’s no wonder that elite athletes from Lionel Messi to Neymar have publicly faced down the tax man.
Qatar World Cup Legacy
A lot has been said about this year’s World Cup—about the host country and the human rights issues; the banning of Russia; and, of course, the money. That will only amplify over the next few weeks. Even Netflix has gotten into the action with “FIFA Uncovered,” a documentary about the 2015 scandal resulting in the IRS-CI and the FBI taking down 14 FIFA officials for corruption, fraud, and bribery charges—including allegations that Qatar bought its way into hosting the 2022 World Cup.
FIFA hopes to change that narrative as the World Cup opens. FIFA President Gianni Infantino told world leaders at the G20 Summit in Bali, “You all know what football means to your people and to your countries; it is about passion, it is about inclusion, it is about tolerance, it is about non-discrimination, and it is about education.”
“Football unites the world,” he said, adding that “the World Cup is an occasion to bring people together in peace and joy, something deeply needed in the turbulent times we live in.”
This is a regular column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.
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