Whether they grew up playing in the parks of Hershey, Pennsylvania, the frequent downpours of Oxfordshire, UK, the bitter cold of Detroit, Michigan, or the manicured training fields of Borussia Dortmund, most aspiring pro soccer players dream of playing in the World Cup. Such was the path of a young Christian Pulisic, or ‘Captain America’, as he is endearingly called by US Soccer fans. For many, there is no greater honor than to represent your country on the biggest stage in soccer. However, players do not dream of having to pay taxes on the foreign-sourced income they earn while playing abroad.
On Saturday, December 3, 2022, the USA was knocked out of the World Cup by the Netherlands in the Round of 16. According to Forbes, each US Men’s National Team (USMNT) player will go home having earned $294,348 in stipends and bonuses. The question is – how much does this equate to in taxes owed to the IRS? Before answering this question, two things need to be considered – income tax treaties and the Qatar World Cup tax exemption.
Per the IRS, the United States has tax treaties with several countries. Under these treaties, residents or citizens of the US are taxed at a reduced rate or exempt from foreign taxes on certain income items. Unfortunately for the USMNT, the US does not currently have an income tax treaty with Qatar. Treaties may come into play for the income they earn with their club teams in the UK, Germany, and France, but not for their World Cup income.
In addition, the Qatar Ministry of Finance issued Decision 9 of 2022, implementing tax exemptions and customs procedures for hosting the FIFA World Cup Qatar 2022, alongside the relevant conditions and limitations. This effectively exempts the USMNT from paying taxes to the State of Qatar. However, they will still be taxed in the US on their worldwide income. As a simple example, let us say that US star, Christian Pulisic, earned $300,000 from the 2022 World Cup in Qatar. Pulisic would pay zero tax to Qatar, but he would likely pay tax on the $300,000 at the highest individual tax rate of 37%. This results in a US tax bill of about $111,000.
Ultimately, with the glory of a World Cup call-up comes the burden of paying taxes on the prize money. The exact amount to be paid on Pulisic’s tax return and that of any other USMNT player depends on each player’s specific circumstances (please consult your tax advisor). Despite Qatar exempting players from paying tax to the State of Qatar, Uncle Sam will still be there to collect what is due.
Author: Devlin Anes | [email protected]
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