There is a category of persons who are considered to be the "citizens of the world." They travel a lot, live and have income in different countries at the same time, for example, football players, or artists. They have long been considered one of the main violators of tax legislation from the point of view of different countries since they use different tax evasion schemes. How much taxes do footballers pay and what are the possible options of tax deduction schemes available to athletes, artists, and other specialists and international interpreneurs and investors.
Choosing the best country for tax residency.
The issue of tax deduction of professional athletes and coaches, artists, and private entrepreneurs gaining profit in international markets and freelancers of different kinds is quite complicated, due to its international scale. Is sponsoring an athlete in other countries tax deductible? How and how much taxes should artists, freelancers, athletes (football and golf players) and other free specialists and entrepreneurs pay nowadays? In the time of globalization and opening of borders, this issue has become particularly acute. On the one hand, this category of taxpayers tries to save on tax payments, as they do not want to pay several taxes to different tax authorities, they want to live in a safe and predictable environment; and on the other hand, tax authorities do not want to miss their chance to collect taxes on the income of these persons, so there is a conflict of interest in this matter.
Why is this question so important? The fact is that this category of people receives income from several sources in different countries, while they can live in several locations during a year, having no single distinct place of residence. However, a person has a citizenship and, accordingly, tax obligations to own country, and the tax authorities of the other country in which this person receives tax also seek to get their share. Therefore the issue of tax optimization is a matter of choosing the optimal country for tax residence for athletes, artists, actors, free entrepreneurs and people who receive income from sources abroad.
When choosing a place of tax residence, it is important to consider several factors. Thus, any measures aimed at tax optimization should not be considered as tax evasion, since this is considered a crime, negative consequences level any benefit from such optimization, and therefore there should be a double tax treaty between the countries of origin and residence. Also, there should be good living conditions, high security, and predictability in a country of tax residence, and the conditions for obtaining residency should be as accessible as possible.
Why the UAE?
Regardless of the legal form of income received by football golf players or other athletes, performing actors, foreign entertainers, and artists, the residence of the UAE is the winning solution. There are no personal taxes, income taxes, corporate and other taxes on income or other similar fees, so you can save a lot with such tax optimization if compared with Germany, Spain, France, the USA, Brazil, China, and other countries. According to the local tax rules, those who have a residence of the UAE get tax exemption. Another significant advantage in favor of the UAE is the fact that the authorities of the country have signed over seventy bilateral treaties on double taxation avoidance, which makes it impossible for tax authorities of these countries to challenge their tax collection rights provided you strictly follow such. And finally, the third important factor – it is very easy to get a UAE resident visa. There are three possible ways:
- Register a company in one of the local free zones (there are no special requirements on this, the main thing is the fact of investing in the local economy)
- Buy a real estate property in the country in the amount of 1 million dirhams (residential real estate);
- Official employment in the UAE.
Probably, the second option would be the most preferable for this category of persons. It is important to note that any actions related to tax optimization should not fall into the category of tax evasion. Otherwise, it would be regarded as a crime and would entail a number of unwanted consequences.