Omotayo Fashola
(Spanish players lift the trophy after their historic victory. Photo by Getty Images)
The FIFA World Cup isn’t just a global sporting spectacle—it’s also a major revenue event for tax authorities, particularly the IRS.
Even before Spain clinched the title against Argentina in a thrilling final, financial winners had already emerged from the tournament, co-hosted by the US, Canada, and Mexico.
The IRS stands out as one of these beneficiaries, thanks to the massive prize money, endorsement deals, and appearance fees earned by players, coaches, and staff across the 48 participating nations.
Experts confirm that earnings generated on US soil are subject to taxation by the Internal Revenue Service, regardless of the recipient’s nationality.
Spain secured the championship with a 1-0 victory, taking home FIFA’s $50 million top prize—part of a staggering $655 million total prize pool distributed based on team performance.
Robert Raiola, a sports tax specialist at PKF O’Connor Davies, emphasized that the IRS collects taxes from all participants, including players, coaches, and referees, ensuring every team departs with a tax liability.
Professional athletes often navigate intricate tax landscapes due to multi-country earnings, performance-based pay structures, and diverse income streams from contracts, royalties, and sponsorships.
The World Cup amplifies these complexities, especially with varying US tax treaties that may exempt athlete earnings in certain cases.
Rob Fagan, a KPMG tax expert, rated the tournament’s tax intricacies an 8 out of 10, noting that many national federations sought specialized tax guidance ahead of the event.
While seasoned players rely on financial advisors, newcomers to the global stage may be caught off guard by unexpected tax obligations.
FIFA distributes prize money to national federations, not individual players, leaving federations to allocate funds among team members—adding another layer of financial planning.
Tax Breaks for Federations, Not Necessarily Players
Reports indicate that participating federations received tax-exempt status for the tournament, mirroring FIFA’s longstanding exemption since 1994.
However, Fagan clarified that this exemption doesn’t extend to players or staff, a common misconception among participants.
International tax treaties may reduce or eliminate double taxation, but thresholds often apply—higher earnings could mean full tax liability in the US.
The US has a tax treaty with Spain but not Argentina, creating disparities in tax obligations for players from different nations.
Christopher Hall, an international tax director, highlighted the complexity of footballers’ tax scenarios, where club affiliations, residency, and national team roles influence which treaty terms apply.
He noted that even teammates may face different tax outcomes, requiring individualized assessments for players and support staff.
Last month, the IRS collaborated with Canadian and Mexican tax authorities to clarify income sourcing rules for tournament participants.
The National Taxpayer Advocate issued guidance for foreign players, coaches, and media, recommending professional tax assistance due to the US system’s complexity.
State Taxes Add Another Layer with ‘Jock Tax’
Beyond federal taxes, state income taxes further complicate earnings, with games hosted across nine US states—three of which (Texas, Florida, and Washington) have no state income tax.
The “jock tax” requires non-residents to pay income tax in states where they earn money, though credits may offset liabilities based on interstate agreements.
Raiola noted that high-earning athletes are closely monitored by state tax agencies, ensuring compliance with local tax laws.
The final match took place in New Jersey, which imposes its own income tax and doesn’t honor international tax treaties.
Raiola confirmed that New Jersey tax authorities would collect taxes on earnings from the championship game, adding to players’ financial considerations.
