The abolition of non-doms has caused a mass of wealth management commentary, and there are always new angles to consider. One is where the rule changes leave sportsmen and women who earn much of their living from overseas.

In March, the UK government's announcement that it was ending the resident non-domicile system (“non-doms”) caused advisors and clients to scramble for clarity on what to do next. One group of people affected by changing rules, whichever political party wins power on 4 July, is sportsmen and women. These days, they are mobile, often earning money around the world and spending most, if not all, of their working lives outside the country. Think of examples such as F1 motor racing driver Lewis Hamilton, or Jude Bellingham, the Real Madrid and England player. 

Andy Oury

The UK tax code arguably isn’t friendly to those who ply their trade outside the UK. In this article, Andy Oury, partner at law firm Oury Clark considers the landscape and what advisors and sports-folk can do. As always, while editors are pleased to share such content, they don’t necessarily endorse all views of guest writers. Email tom.burroughes@wealthbriefing.com if you want to respond.

Summer is coming – meaning the festival season and 2024 Olympics are right around the corner. Many entertainers and sportspeople will be preparing to travel around the world to perform or play sport. But how will they be taxed? 
 
It’s an interesting question – but also a complicated one, as there are so many factors to consider. The way entertainers and sportspeople make their money varies so widely: their work is not limited to making one-time appearances on a stage or pitch. They are also involved in sponsorships, advertising and more – creating many different streams of income, all of which could be taxable, depending on the location.
 
Then, to complicate things further, when entertainers go on tour or work abroad, each country they visit will have its own individual tax system that needs to be taken into consideration. 
 
What about VAT? Well, musicians will need to figure out whether any VAT costs suffered from staging a performance can be reclaimed. And amid this, there are also visa requirements to consider – in the UK visa system there’s a special unit which deals with sportspeople and entertainers coming in, but this will vary from country to country.
 
Sadly, there’s no “one-size-fits-all” approach to international taxation. There are just too many different variables flying around. But one thing we can say, across the board, is that regardless of the country or type of income, entertainers will always be taxed when they work, wherever it may be.
 
A big concern for entertainers who work abroad is that they will be taxed on their earnings both by their country of residence and the country where they earned it. Entertainers and sportspeople are always taxable on the work they perform in a country, therefore â€“ regardless of where they live – they can’t avoid being taxed on their performances.

What is more complicated is understanding how much a sportsperson's surrounding earnings (such as sponsorship, hospitality, etc) end up being taxed there as well. Entertainers and sportspersons are also likely taxable on everything globally in the country where they are tax resident, which is likely the place where they live and spend most of their time.  
 
The UK has changed various rules for non-dom’s (effectively a non-dom is a “foreigner” who was not born in the UK nor were their ancestors, often misreported as being connected to where one has a house) – however generally these rules are not going to impact international performers.
 
In any case, it’s important for entertainers to remember that failing to pay tax on the work they have done abroad is not an option. It’s also a criminal offence, with the potential for substantial fines and even custodial sentences. But international tax is extremely complicated – there is a reason why accountants and lawyers spend hours of their time poring over heaps of spreadsheets, often where the tax is withheld at the source in the local country!
 
To be clear, entertainers and performers wherever they may live – even if it’s in an offshore low tax territory – do not avoid paying tax on their performances in the UK, or in most countries. The tax authorities are also rather aggressive at trying to argue that any surrounding income is taxable in the UK; the authorities often target high profile people, so they are always under intense scrutiny. Also, any UK-resident performers and entertainers are fully taxed here, and suffering tax overseas – and, without decent advice, maybe even be subject to double taxation if they are not carefully planning with professional advisors.