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Thread: Are prize money subject to tax? Reply to Thread
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  Topic Review (Newest First)
01-09-2013 02:45 PM
sammy01
Re: Are prize money subject to tax?

If a country you play in and earn prizemoney has tax rules you pay on site tax which is usually taken from your prizemoney. I don't know about other countries but the UK has a allowance of I think it is £500 before tax for sports prizemoney.

Players then pay the home taxes of whatever country they live in. Many players have Monaco as their residence because I believe the rule is you must spend 2 weeks a year there to class it as your official residence and can then claim the tax benefits of living there.
01-09-2013 01:56 PM
JurajCrane
Re: Are prize money subject to tax?

Very important is also double-taxing issue. Hrbaty spoke about prize money on tour few years ago. Here are some words :

"After winning tournament, player is holding check for example for 100 000 $. Number of players' accounts are kept in ATP central and tournament sends money directly to ATP central. ATP sends money to players on Monday after final. By Wednesday, they are there. Of course, after tax."

"So basically if I won a tournament in Dubai and had a prize money 100k, I would get 100k on my account because in Dubai is 0% tax from winning. But I would have to pay 19% income tax in Slovakia so I won 81 000 netto after all". (my comment : in Slovakia is now 25% income tax for income higher than 34 000 Euros)

"But there are some more issues. If I won a tournament in Australia, where tax is 48%, I would have only 52 000. And if Australia doesn't have a deal with Slovakia about double-taxing the same thing, I would pay another 19% in Slovakia (now 25%) so I would have only about 42 000 (now 38 000 !)."

He is talking about more things : "Quality coaches cost from 50 000 to 70 000 per annum. Topstar coaches may cost from 500k to million p.a."



By the way, Hrbaty has residence in Monte Carlo, not in Slovakia - but principle is what I am writing about. From 100 000 you would have only 38 000 - and there are surely countries, where you'd have even less.

Now I don't know if Federer has a residence in Switzerland, but he lives in Dubai, so probably in UAE.
11-30-2006 01:15 AM
its.like.that
Re: Are prize money subject to tax?

Players don't get to keep their prizemoney anymore.
11-29-2006 09:29 PM
zicofirol
Re: Are prize money subject to tax?

Quote:
Originally Posted by cmurray View Post
Actually, it was said twice in this post. And both posts came while I was typing my question, so I didn't see that it had already been addressed. My post took a while because my children were trying to kill each other and I had to intervene.

But hey...thanks for being grumpy and intolerant! That always makes for a pleasant online experience!
it was asked like 10 times by more people, nothing personal...
Just an FYI for everyone else...
11-29-2006 09:20 PM
Lee
Re: Are prize money subject to tax?

Quote:
Originally Posted by Socket View Post
Well, for a house, the $100,000 appreciation is one kind of capital gain. The VAT like a sales tax, but it isn't paid by the purchaser as a sales tax is. Here's a link if you want a clearer explanation that I can provide. It's prevalent in Europe.

http://en.wikipedia.org/wiki/Value_added_tax
OK! As it mentioned in the link, it's called GST in Canada. It's 6% across the country for buying a donut in a donut shop (but not when you buy half a dozen) to having a haircut. It's reduced from 7% since the introduction. In the eastern (smaller) provinces like PEI, New Brunswick, etc., it's called HST (a combination of GST and provincial taxes) to cut down the amount of paper work.

But if you're non-residence in Canada, you can fill in a form upon your leave from Canada to have the taxes refunded (including your hotel room and purchases you haven't consumed in Canada) if it's over certain amount. I can't remember how much.
11-29-2006 09:14 PM
cmurray
Re: Are prize money subject to tax?

Quote:
Originally Posted by Socket View Post
The US is one of a small number of countries that taxes on the basis of citizenship, rather than residency. So all US citizens are required to file federal tax returns even if they live and work abroad full-time (as my brother does, in France). Because the US and France have a tax treaty which governs the payment of taxes by both countries' nationals, my brother's French tax payments are credited against the US tax he would otherwise owe on his income. So, he does not pay twice on his income.

In many other counties, the system is residency-based, not citizenship-based, so if you reside full time in a country where there is no (or lower) income tax, you are not liable to the country where you are a citizen for any tax on income earned outside of your home country. This is why you get what are called "tax exiles." (Ingmar Bergman is a famous Swedish tax exile, who lived abroad to avoid paying what he called was a 90% marginal tax rate.) Pat Rafter was an Australian tax exile who took advantage of the lower/non-existent tax rates on Bermuda. As a Bermuda resident, he only paid Australian taxes on income he earned in Australia, and not on income he earned in other countries. This would not be the case for US citizens, who would be liable for US taxes (some of which would get a credit) for all income earned both at home and abroad.

Yes, this will be on the test.
Very informative. Thank you VERY much.
11-29-2006 09:12 PM
Socket
Re: Are prize money subject to tax?

Quote:
Originally Posted by Lee View Post
Never heard about this term when I was filing my tax forms. What exactly is this?

Is it about the added value of the house you live? Like you bought the house for $100,000 and sold it for $200,000?
Well, for a house, the $100,000 appreciation is one kind of capital gain. The VAT like a sales tax, but it isn't paid by the purchaser as a sales tax is. Here's a link if you want a clearer explanation that I can provide. It's prevalent in Europe.

http://en.wikipedia.org/wiki/Value_added_tax
11-29-2006 09:06 PM
Socket
Re: Are prize money subject to tax?

The US is one of a small number of countries that taxes on the basis of citizenship, rather than residency. So all US citizens are required to file federal tax returns even if they live and work abroad full-time (as my brother does, in France). Because the US and France have a tax treaty which governs the payment of taxes by both countries' nationals, my brother's French tax payments are credited against the US tax he would otherwise owe on his income. So, he does not pay twice on his income.

In many other counties, the system is residency-based, not citizenship-based, so if you reside full time in a country where there is no (or lower) income tax, you are not liable to the country where you are a citizen for any tax on income earned outside of your home country. This is why you get what are called "tax exiles." (Ingmar Bergman is a famous Swedish tax exile, who lived abroad to avoid paying what he called was a 90% marginal tax rate.) Pat Rafter was an Australian tax exile who took advantage of the lower/non-existent tax rates on Bermuda. As a Bermuda resident, he only paid Australian taxes on income he earned in Australia, and not on income he earned in other countries. This would not be the case for US citizens, who would be liable for US taxes (some of which would get a credit) for all income earned both at home and abroad.

Yes, this will be on the test.
11-29-2006 08:59 PM
Lee
Re: Are prize money subject to tax?

Quote:
Originally Posted by Socket View Post
Is there a value-added tax (VAT) in Canada?
Never heard about this term when I was filing my tax forms. What exactly is this?

Is it about the added value of the house you live? Like you bought the house for $100,000 and sold it for $200,000?
11-29-2006 08:56 PM
Socket
Re: Are prize money subject to tax?

Quote:
Originally Posted by Lee View Post
There's no change for all I know. Canada never tax on price money you won on game shows or lottery.

The income tax is higher than US in general and lots less credit. e.g. the interest payment on your home mortgage (the one you live in) gets no credit on your income tax. Also, across the country there's a 6% tax on goods and services (except grocery) and all provinces except one have provincial tax around 7/8% on goods.
Is there a value-added tax (VAT) in Canada?
11-29-2006 08:50 PM
RickDaStick
Re: Are prize money subject to tax?

I remember Ljubo saying a few years back he was going to play in Doha to begin the year because he would get all the earnings due to no taxation.
11-29-2006 08:38 PM
atheneglaukopis
Re: Are prize money subject to tax?

Quote:
Originally Posted by Deb!. View Post
I thought someone posted somewhere in this thread that if you can prove you live outside the US a certain amount of the year, then you don't have to pay Federal Taxes. But I don't know anything about it either
Then we are wise in the Socratic sense: we know that we do not know.
11-29-2006 08:29 PM
Deboogle!.
Re: Are prize money subject to tax?

Quote:
Originally Posted by atheneglaukopis View Post
I know less than nothing on the subject, but maybe you have to give up your American citizenship in order not to have to pay American taxes? Because you can live abroad and keep your citizenship, of course, but I think you still have to pay taxes? But I really have no idea so I should not say anything.
I thought someone posted somewhere in this thread that if you can prove you live outside the US a certain amount of the year, then you don't have to pay Federal Taxes. But I don't know anything about it either
11-29-2006 08:21 PM
atheneglaukopis
Re: Are prize money subject to tax?

Quote:
Originally Posted by Deb!. View Post
Huh? Lots of Americans live abroad for long periods of time and don't have to give up their citizenship. I don't know what the tax implication is but there are American citizens living all over the world who are still citizens. In fact, any baby born to a citizen living abroad is also a citizen, so I'm confused by this
I know less than nothing on the subject, but maybe you have to give up your American citizenship in order not to have to pay American taxes? Because you can live abroad and keep your citizenship, of course, but I think you still have to pay taxes? But I really have no idea so I should not say anything.
11-29-2006 08:05 PM
Deboogle!.
Re: Are prize money subject to tax?

Quote:
Originally Posted by cincy View Post
It's really difficult for American's to move to other countries (i.e., Monaco) for tax purposes. You would have to give up your American citizenship entirely. That would be tough for most of us, I think.
Huh? Lots of Americans live abroad for long periods of time and don't have to give up their citizenship. I don't know what the tax implication is but there are American citizens living all over the world who are still citizens. In fact, any baby born to a citizen living abroad is also a citizen, so I'm confused by this

Quote:
Originally Posted by cincy View Post
I really don't think taxes have anything to do with Americans not wanting to play in Europe. It's mostly because American players don't want to leave home for as long as it takes to play the clay and then grass season in Europe. Who wants to be away from home for 7 or 8 weeks in a row?
Yeah, I agree. I really doubt the tax implications cross their mind at all - especially considering that you only pay tax on what you win and so if you're not playing at all, you don't win anything, and nothing is certainly less than some earnings minus taxes.
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