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Gold medals for British athletes could quickly lose their lustre if participants unknowingly become liable for French taxes on income generated at the Olympics, as tax experts warn of potential penalties for non-compliance.
While athletes are not typically awarded prize money for their successes at the Games, French authorities can still tax income derived from other activities such as sponsorship and event appearances while in the country.
Paris 2024 organisers have tried to pre-empt any friction, publishing a tax guide ahead of the games that outlined some of the considerations for sports stars and their teams. “Non-residents of France for tax purposes are taxable in France solely on their French-source income, subject to any provisions in applicable tax treaties,” it said.
The so-called “double taxation treaty” between the UK and France dictates that, for UK-resident sports stars in France, activities funded by public funds, local authorities or statutory bodies are largely tax-exempt. Many Team GB athletes receive funding from government-backed UK Sport in the form of a tax-free grant of up to £28,000 for top athletes, provided they earn less than £65,000 from other sources such as sponsorship deals.
But Andrew Parkes, national technical director at tax advisory firm Andersen, warned that issues could still arise for self-funded athletes and those paid by sponsors. “An example would be where an unfunded UK star is paid to attend a sponsor’s event while in France,” Parkes said. “Here, the France-UK [treaty] does not switch off France’s right to tax.”
It is not the first time the topic of tax and Olympians has come to the fore. In 2012, Jamaican sprinter and 100m world record holder Usain Bolt was lured back to the UK to perform at the London Games with an Olympic tax amnesty for overseas athletes. Bolt had not raced in the UK for three years prior due to what he deemed the high tax take on his appearance and sponsorship earnings.
At this year’s Games, the onus will be on athletes to file a tax return if needed as France’s authorities are unlikely to send requests to non-residents. This presents a potential “pitfall” for sports stars, alongside other performers and TV presenters only working in the country for a short period, said Vanesha Kistoo, partner in global mobility at tax advisory firm Blick Rothenberg.
“Athletes need to ensure that they are aware of their reporting obligations because there are penalties for non-compliance,” Kistoo said. “Like the UK, France has a penalty regime that is based on behaviour and can be as high as 80 per cent of underpaid taxes.”
There are nuances in the rules that create hurdles for athletes trying to assess the tax reliefs and deductible expenses available. One of the conditions for exemption from French tax is that pay for the non-resident athlete or performer is “not borne by a permanent establishment which the UK employer has in France”.
In the case of sponsorship, if an athlete receives an income from a sponsor that has an office in France, they could be liable for tax on that income, Kistoo said. “There may be an obligation on the sponsor to withhold tax at source in France before a payment is made to the athlete.”
A withholding tax is charged at a rate of 15 per cent, but under the double taxation treaty athletes can apply for reliefs.
Helen Jones, partner in the private clients tax team at advisory firm BDO, encourages athletes and performers to “maximise the reliefs available” to avoid paying any unnecessary charges.
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