Spain's World Cup triumph on Sunday night in New York has been overshadowed by the imminent loss of a substantial portion of their £37 million ($50 million) prize money to the US Internal Revenue Service (IRS). The Spanish national team defeated a bad-tempered Argentina side, conceding only one goal throughout the entire tournament, to lift the trophy. US President Donald Trump presented the trophy to the winning team.
IRS Claims a Share of Winnings
According to financial website MarketWatch, the IRS is set to be the real winner off the field, as any prize money earned on US soil is subject to taxation. Robert Raiola, director of the sports and entertainment group at accounting firm PKF O’Connor Davies, stated: "It doesn’t make a difference who wins the game. The IRS will get a piece." The prize pot for Spain totals $50 million, approximately £37 million, not including additional revenue from sponsorship deals and other tournament-related income.
Tax Complexities for Foreign Players
The US tax system's complexities regarding foreign nationals earning money in America may surprise some players. Rob Fagan from KPMG in Washington noted that while experienced players likely have advisors to navigate tax obligations, newcomers to the competition "might be a little shocked." The amount the IRS claims depends on factors such as the US state where revenue was earned and whether the player's home country has a tax treaty with the US.
Tax Treaty Differences Between Spain and Argentina
The US has a general tax treaty with Spain, but no such agreement exists with Argentina, meaning Argentine players face different tax liabilities. Christopher Hall, also from PKF O’Connor Davies, explained: "Even within the same team, there may be different tax answers for different players. You have to go through and look [at] your entire entourage." FIFA, as the tournament's governing body, secured tax-exempt status in the US in 1994, but it remains unclear whether individual national federations have obtained similar exemptions.
