Pre-season football tours are a common practice in professional football (called “soccer” in some countries), typically during the off-season period. These tours involve clubs travelling internationally to participate in exhibition matches against other clubs or local teams. While pre-season tours are aimed at helping football clubs prepare for the upcoming season, they also have a significant commercial value for football clubs and help increase their global reach, attract new fans, and generate revenues.
There are immigration, tax, and social security implications that finance and tax professionals associated with travelling clubs should consider before embarking on these tours. With the increase in pre-season tours, there has been increased scrutiny from various tax authorities across the globe to ensure that travelling clubs are compliant.
A compliance obligation can be triggered for players, support staff, talent scouts, and managers. Therefore, it is extremely important to review the obligations for the various individuals part of the travelling team.
Compliance across immigration, tax, and social security is particularly critical because of the public nature of professional sport. Athletes and organizations are always in the spotlight in the press. Moreover, with the increasing presence of sports stars on social media, and event schedules publicly available, it is easy for overseas authorities to know where these individuals are at almost every moment. Therefore, it is even more important to be aware of the compliance requirements of each country a team visits.
Visa and entry permits: Clubs should ensure that all players and travelling staff have the appropriate visas when travelling to the various locations during their tour. There have been instances recently where immigration authorities have denied entry to individuals who do not have the correct visas. Therefore, it is important to review the entry requirements for each country.
Employees vs. contractors: With the recent changes in ways of working, authorities around the globe are placing focus on companies that use contingent labor, such as agency workers and self-employed individuals, and are increasingly scrutinizing the employment status of this population in order to address disguised employment. As a result, organizations can face financial, operational, and reputational risk for failing to manage this complex and often subjective area. Also, when travelling, clubs should consider how they are engaging with their workers, and whether the nature of the employment relationship has additional implications for the company during the tour.
Compliance obligations: Each country or territory around the world has its own set of rules for determining whether there is a withholding and reporting obligation at a country level, and in some cases a regional/state/municipal level. Therefore, it is important that a review is carried out to ensure that your travelling team are compliant, wherever they travel. Withholding obligations may be due by way of operating a payroll or simply remitting taxes through a one-off process. In many instances, an advanced technology solution is critical to assessing the immigration, tax, and social security obligations for both non-playing staff and players as they travel.
Player compensation: A football player’s compensation structure can include many elements, therefore, it is important to ensure that the appropriate compensation is reported when travelling. For example, some jurisdictions would consider training days as taxable income. As part of a pre-season tour, players may also receive other income for promotional activities carried out for their sponsors. Therefore, a careful review needs to be carried out to ensure whether any compliance withholding obligations are required.
Tax treaties play a vital role in determining the tax treatment of income derived from tours, aiming to prevent double taxation and promote cooperation between countries and territories. The interaction of tax treaties for pre-season football tours requires careful consideration of a number of factors, including the duration of stay, the nature of income generated (such as match fees, image rights, and endorsement deals), and the specific provisions outlined in the bilateral tax treaties between the home country of the clubs and the host countries of the tour. Income associated with the different duties performed on tour (e.g., matches vs. training) may have separate tax treatments and withholding tax obligations.
Planning and expertise in tax treaty interpretation are essential to ensure compliance with relevant tax laws, minimize tax burdens, and avoid potential disputes between players, clubs, and tax authorities.
There has been a higher focus from authorities across the globe around social security compliance and the correct documentation of short-term travel. In general, an A1/Certificate of Coverage should be in place from day one for the majority of countries; not having this in place can cause problems (e.g., demands for host social security contributions to be paid).
This is ultimately a business decision, but ensuring A1/Certificates of coverage are in place is a good starting point and demonstrates to the authorities, should there be an audit, that practical steps are being taken to manage compliance risks.
For a detailed discussion of how your sports team can stay compliant through international travel, please reach out to your local Vialto contact, or:
Poonam Parmar
Global Sports and Entertainers Leader, Vialto Partners
poonam.parmar@vialto.com
Ben Van den Dungen
Global Sports and Entertainers, Private Client Lead, Vialto Partners
benjamin.van.den.dungen@vialto.com
Linda Soriano
US Co-lead, Sports and Entertainers, Vialto Partners
linda.soriano@vialto.com
Marlene Goodger
US Co-lead, Sports and Entertainers, Vialto Partners
marlene.l.goodger@vialto.com
Please reach out if you’d like to learn more about Vialto.