24-04-2012 / 2012 - Tax Exemptions for EURO 2012 in Poland and Ukraine - European Taxation

The June 2012 issue of European Taxation (IBFD) publishes the article "Tax Exemptions for EURO 2012 in Poland and Ukraine" from the authors Karolina Tetlak (Universitity of Warsw) and Dick Molenaar. Today, the IBFD has publised th article already online (see attachment).

The article discusses the special tax exemptions, which both countries have implemented for EURO 2012 (8 June - 1 July 2012). Most attention goes to the taxation of the football players, because according to Art. 17 of the bilateral tax treaties of Poland and Ukraine, the country of the sports events has the right to tax the income of the football players, bur the UEFA has forced both countries not to enforce this in the national legislation. This unilateral exemption of source taxation is comparable with the unilateral exemption which the Netherlands introduced in 2007 for artistes and sportsmen from tax treaty countries.

Not using the taxing right from tax treaties. It looks odd, but is very positive because it takes away the risk of excessive or sometimes even double taxation, which very often follows from Art. 17 of the tax treaties. The best option would be to remove Art. 17, because this special allocation rule hits the wrong target. Countries should only levy a withholding tax from payments to artistes and sportsmen residing in non-treaty countries to counteract tax avoidance behaviour.

The UEFA not only achieved this with EURO 2012 but also with the Champions League finals of 2011 (Londen), 2012 (Munich) and 2013 (Londen). And the IOC came up with tax exemptions in Canada (Winter Olympics 2010) and the United Kingdom (Olympics 2012).

There is only one negative side to the tax exemption for EURO 2012, which is that the exemption method to eliminate double taxation has been agreed in the treaty between Poland and Spain. This means that football players having their residency in Spain and playing their matches in Poland not only pay no tax in Poland but also not in Spain. Double non-taxation, therefore. This does not happen with players from other countries, because in those tax treaties the tax credit method has been agreed.


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