SPORT TAXATION for Professionals and Amateurs
Professional and amateur athletes and sportspeople represent a particularly complex category from a tax perspective, as they may hold citizenship and tax residency in one country, perform their activities in another, and receive income from multiple states.
maltaway sports taxation
Professional Athletes in Italy
In Italy, professional athletes are regulated by Article 2 of Law No. 91/1981, which defines professional athletes as:
“athletes, coaches, technical sports directors, and athletic trainers who perform sports activities on a paid basis with continuity within disciplines regulated by CONI and who obtain qualification from national sports federations.”
The professional sports federations recognized by CONI include:
- Italian Football Federation (F.I.G.C.)
- Italian Cycling Federation (F.C.I.)
- Italian Golf Federation (F.I.G.)
- Italian Basketball Federation (F.I.P.)
Most professional athletes belong to the Italian Football Federation. However, many high-level disciplines do not fall under professional sports from a legal standpoint.
Athletes can work under two different employment structures:
- Employees (e.g., football players)
- Self-employed (e.g., golfers)
For employed athletes, income is subject to withholding tax at source by the sports club.
Earnings from tournaments and competitions are considered self-employment income and subject to withholding tax based on total income.
For Italian tax residents, the worldwide taxation principle applies, meaning that all income, regardless of where it is earned, is taxable in Italy. However, foreign taxes paid can be offset through a tax credit.
Non-resident athletes performing activities in Italy are generally subject to a 30% withholding tax at source.
This provision is based on Article 17, which, contrary to OECD principles for employment (Article 15) and self-employment (Article 14) income, ensures that athletes’ earnings are taxable in the country where the activity is performed, regardless of a fixed base or minimum stay period.
Image Rights and Sponsorships
A key income source for professional athletes is the exploitation of image rights. In Italy, these earnings are classified as self-employment income if directly related to activities carried out within the national territory.
Goods received as sponsorship compensation are generally considered employment income and subject to taxation.
Tax Incentives for Athletes
Italy has introduced tax incentives for returning professionals and expatriates, some of which apply to athletes. However, the latest Impatriate Decree has imposed stricter eligibility requirements, making these benefits less attractive than previous regulations.
While professional athletes were initially excluded from these benefits, they are now generally included, provided they meet specific criteria, with a current 50% tax exemption for expatriates relocating to Italy for five years.
Sports Work Reform: Legislative Decree No. 36/2021
From July 1, 2023, Legislative Decree No. 36/2021 introduced new regulations for professional and amateur sports entities, covering civil, social security, and tax aspects.
Article 25 defines a sports worker as:
“an athlete, coach, instructor, technical director, sports director, athletic trainer, or referee who performs sports activities for compensation outside the scope of amateur activities under Article 29.”
Sports work can be classified as employment or self-employment. Employed athletes must be registered with the Sports Workers’ Pension Fund (FPLS) managed by INPS, with self-employed workers eligible under certain conditions.
For amateur athletes, the default employment classification is self-employment as coordinated and continuous collaboration, unless proven otherwise (Article 28). Amateurs are enrolled in INPS’ separate management scheme, with contributions required on earnings exceeding €5,000 per year.
Prizes awarded by CONI, federations, or other recognized sports entities for performance in competitions are subject to a 20% withholding tax.
If the prize is awarded by an unrecognized foreign entity, standard taxation applies, and classification depends on the underlying contractual relationship.
Generally:
- If the activity is professional, the prize is classified as employment or self-employment income.
- If the activity is amateur, the prize may be considered occasional self-employment income or, if recurring, habitual self-employment income.
This classification has significant implications for amateur athletes receiving international prizes, as they must report them in tax returns and may be subject to social security contributions.
Prizes awarded by CONI for Olympic medals benefit from a special 20% withholding tax, whereas sponsorship or international prizes are subject to standard taxation.
Professional Athletes in Malta
Malta offers a highly favorable tax system for professional athletes:
- A flat 7.5% tax rate applies to income from sports activities, providing a significant advantage over standard taxation.
- This rate covers registered athletes affiliated with SportMalta and a recognized national governing body.
- The Legal Notice 147 of 2024 extended the 7.5% rate to coaches, sports directors, team administrators, doctors, and physiotherapists affiliated with SportMalta.
Under Malta’s territorial tax system, only income generated in Malta is subject to taxation, benefiting sports professionals performing activities within the jurisdiction.
Self-employed athletes (e.g., golfers, tennis players, free divers, and all individual sports) may benefit from full tax exemption under specific conditions.
This system of taxation in Malta, under the NON-DOM territorial taxation regime, concerns income generated in Malta, typically that of employment where the service is performed within the jurisdiction of the employer.
It is a different matter, however, for self-employed, with autonomous services and other similar sources, which may be performed outside the territory, typically golf, tennis, free-diving, and individual sports in general.
For these, the territorial tax regime with tax exemption applies under certain conditions.
Comparison with Other European Tax Regimes
Malta stands out for its low taxation on athletes compared to other European countries:
- Italy: Progressive tax rates up to 43% + 3% regional/municipal surcharges.
- Spain: Foreign athletes can access the “Beckham Law”, with a 24% flat tax on income up to €600,000.
- France: Progressive tax rates reaching 45%.
With its 7.5% flat rate, Malta offers one of the most competitive tax regimes for sports professionals in Europe, often surpassing even Monaco’s tax advantages.
This is in the context of a global taxation regime and a declaratory regime now common in all white-listed countries, which is quite different and worse than the permanent principle of territorial taxation for non-dom residents in Malta, with no declaratory regime and which for certain specific conditions is even better than that for residents in Monte Carlo.
Tax Residency and Compliance for Athletes
Determining tax residency and efficient yet compliant taxation requires a tailored professional analysis based on an individual’s personal, family, economic, employment, and asset situation.
Maltaway provides customized international tax advisory services to address these needs, ensuring compliance while optimizing taxation.
International Tax Advisory Services
Our personalized multinational tax consulting service supports individuals, investors, and businesses in optimizing their legal, income, and asset structures internationally.
In particular, for professional and amateur sportsmen and sportswomen, for the different income categories and tax regimes applicable, there may of course be exemptions that extend to income, emoluments, interest and dividends received other than salaries and wages and bonuses received for their activity, depending on the country of residence and any non-dom regime in place.
The legal and tax profile of this category is very specific, and with regard to different income and assets coming from different countries or in the country of performance, requires special attention and expertise.
In this regard, for financial income, specific knowledge is required, and a special threshold of care is required, so much so that many financial intermediaries reject opening banking and investment positions with them due to the compliance complications required.
We have these specific practices and can also support you with these needs, including the W-8BEN form required by financial intermediaries for US-related positions.
European and international clients demand a multinational service, where tax advice on different countries, including country of origin and country of destination, fits their individual profile, income, assets.
Clients are looking for compliance, efficiency, independence, global know-how, speed, which is why we offer:
A necessary consultancy if you are equipped with Assets and short on time …
A customized Tax Consultancy service, for the internationalization and protection of Individuals and Businesses with a comparison between Italy, Malta, and 30 other countries
with analysis of specific individual needs and identification of opportunities and solutions offered by redomiciling oneself or one’s assets or business to Malta, an International Advisory service with solutions and opportunities in and from Malta compared to Italy and other countries in or outside Europe
We offer a sophisticated advisory solution to compare the tax implications of such income and investments across different jurisdictions, considering the intermediaries involved in the transactions, the location of the asset, the residence and citizenship of the owner (UBO)
For expert legal, tax, corporate governance, investments and wealth protection, and residency advisory services, contact Maltaway today.
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