Professional athletes have more earning potential than ever before. Team contracts, performance clauses, prizes, endorsement deals, and countless other opportunities for personal branding mean that athletes, regardless of sport, have an expansive value network, spanning numerous jurisdictions, deal structures, and currencies. While this is all advantageous, it’s also overwhelming, even for those with experienced teams.
The scale of global earnings is widely understood; the execution challenges are often less visible. International income is governed by overlapping regulatory regimes, withholding authorities, and reporting standards, including those administered by HMRC and the IRS, each operating on different timelines. In this environment, outcomes are shaped as much by timing and coordination as by technical compliance.
Earning Across Borders
Traditionally, an athlete’s financial obligations were largely confined to where they lived and played. Today, global leagues and cross-border endorsement activity mean income may originate from multiple entities in different countries, currencies, and payment schedules.
This multi-jurisdictional earnings structure often creates a disconnect between where income is earned and where it is paid, reported, and taxed. For example, a UK golfer may win prize money at a US tournament, receive payment from a European federation, and have funds deposited into a Swiss or US account. Regardless of payment mechanics, the athlete remains subject to both residence-country taxation and source-country withholding. The same principles apply to US athletes competing abroad.
Without planning, overlapping residence and source-country rules can result in excessive withholding, double taxation, and inefficient cash-flow timing. Addressing this requires confirming the source of income, identifying which jurisdictions have taxing rights, and managing nonresident withholding through appropriate filing arrangements. Where applicable, reduced-withholding applications and supporting documentation allow taxation to reflect net income rather than gross receipts, a process that Prager Metis experts manage in practice
Note
In the UK, non-resident athletes may apply through HMRC’s Foreign Entertainers Unit (FEU) at least 30 days before activity begins to seek withholding based on net profits. In the US, a Central Withholding Agreement (CWA) must also be submitted well in advance, typically 45 days before competition, appearances, or endorsement activity, to adjust default federal withholding based on projected net income, working alongside agents and legal counsel to align withholding with projected net income before activity begins. Where these processes are handled late or without specialist oversight, withholding is typically applied to gross receipts, and recovery options are limited.
Managing Currency Risk
Currency movement is a material, and often underestimated, risk for professional athletes. Contracts are typically denominated in the currency of the country where an athlete performs, which can expose non-resident players to significant FX volatility over time.
When PM advisors with cross-border expertise are involved early, tax valuation dates, funding needs, and currency conversion are planned together, reducing the likelihood that statutory deadlines dictate conversion outcomes.
A €10 million multi-year contract, for example, does not represent a fixed economic outcome. Currency depreciation alone can reduce the effective value of earnings by 10–20%. This erosion is magnified by fixed-percentage professional fees—agents, managers, and advisers are paid on gross contractual amounts, while the athlete absorbs the FX loss.
Timing compounds the issue. Tax authorities generally assess income using the exchange rate in effect when income is earned or vested. If a currency weakens before funds are converted, tax may still be due on a higher valuation. Statutory deadlines may force conversion during unfavourable market conditions or require short-term borrowing to meet tax obligations.
Avoiding Double Taxation
For non-resident or international athletes, there is a misalignment between the currency of earnings and the currency of tax compliance. For example, a US athlete performing in the UK may earn a performance bonus in pounds sterling, held in a UK account. At the same time, they must calculate their primary tax liability in US dollars based on the exchange rate at the time of the bonus. Additionally, the athlete may be subject to withholding tax in the foreign jurisdiction, a tax applied before any conversion. All of this occurs before the net funds reach the athlete’s domestic bank. Then, to meet strict tax deadlines at home, the athlete may have to convert their bonus during a period of unfavourable exchange rate volatility, culminating in a material loss of purchasing power and, essentially, an unrecorded levy, or double taxation, on their gross earnings.
Foreign tax credits are intended to mitigate double taxation, but they rarely address mismatches in timing or currency conversion, meaning athletes are often not fully offset for amounts paid abroad. Addressing these gaps requires coordinated oversight of tax, currency, and reporting obligations across jurisdictions, particularly where income is earned and paid internationally.
Prager Metis takes a preemptive approach by using treaty positions and credit planning to align foreign taxes paid with home-country reporting, reducing the risk that credits exist on paper but fail to protect net earnings in practice.
The issues outlined above often surface in very practical ways once income is earned, paid, and reported across borders. The questions below are best addressed before agreements are finalised, while there is still time to structure withholding, documentation, and reporting positions. This is where Prager Metis’ experts’ advisory is most valuable, particularly when HMRC and IRS processes set timelines that cannot be corrected once activity begins.
Questions that should be addressed before agreements are finalised
Why can the same endorsement income be taxed in more than one country?
Endorsement income may be subject to double taxation because multiple jurisdictions claim taxing rights based on where an athlete lives or works, or where NIL is marketed.
How do currencies affect the value and timing of foreign tax credits?
Fluctuating exchange rates can create valuation gaps between taxes paid and credits claimed. This typically reduces the credit’s “home country” value.
What happens when endorsement income is paid by a foreign affiliate?
Foreign affiliates may apply local withholding taxes immediately, triggering complex reporting requirements. This may result in double taxation if not properly credited against an athlete’s home-country tax liabilities.
Why does withholding often feel higher than expected?
Withholding tax is deducted from gross income before expenses such as agent fees, training, travel, or currency conversions are incurred. These additional costs make withholding feel higher than expected.
How detailed do records need to be to support income allocation?
To prevent multi-country tax claims, records must include every “duty day” and production or performance location, documenting exactly where services were performed.
When should currency conversion decisions be made relative to tax payments?
If an athlete wants to maximise value, converting closer to the tax assessment date helps minimise exchange rate discrepancies and reduces unexpected liability.
Moving From Compliance to Control
In professional sports, an athlete has several ways to increase their earnings and establish their brand, but that growth mindset must recognise the risks and tax scrutiny such opportunities create. A focus on tax compliance isn’t enough for global athletes with multiple endorsement deals. To avoid double taxation, athletes and their teams must adopt currency management and documentation discipline. They must coordinate deals and integrate tax, treasury, and endorsement planning into wealth management strategies.
That level of coordination is precisely where our team of experts is brought in, providing advisory oversight across multi-state filings, FEU clearances, CWA submissions, and treaty and credit positions so the athlete’s team is not managing cross-border execution in fragments.
Related reading:
For a broader foundation on residency rules, income sourcing principles, and domestic versus international compliance obligations, see Navigating Domestic and International Tax Compliance, which provides essential context for the execution strategies discussed here.
