Where Do Tennis Players Pay Taxes?
The second Grand Slam tournament of the year enters its second half. Round four is being played under the Parisian sun.
The tension is rising and the bookmakers watch the gravel of Roland Garros carefully…
Top tennis is a world of big money. The bookies, sponsors and players know it. The tax man knows it, too.
While many of us earn their living by sitting in a cubicle, some “fortunate ones” get to run around a tennis court for a living. But being a professional sportsman does not eliminate the tax burden.
The total price money in the men’s singles tournament exceeds EUR 10 mio. The winner in Paris will earn EUR 1,8 mio.
In order to take that amount home, many pro tennis players choose to live in a “shoebox”. What else to call a place where 20,000 inhabitants are squeezed on a territory not bigger than Central Park?
We are talking about Monaco.
The tiny principality on the shores of the Mediterranean Sea does not tax its inhabitants on their worldwide income. No wonder that it was discovered as a perfect location for residency by tennis legends like Bjorn Borg and Mats Wilander in the 1970s. In those days, Swedish top income earners faced a killing tax rate of 90%. “Luckily” this has dropped to 57% in 2002…
Boris Becker, the enfant terrible of German tennis, has done the same a little later. The sad part of his story is that the German tax-man persecuted him frantically. The precedent for all of us: remember that if you ever forget your toothbrush anywhere on German territory, chances are that you will be considered a German resident (and taxed as such).
Nowadays, Monaco offers primary residence to many of the world’s top-ranked male and female players. This includes Serbia’s Novak Djokovic (1), the Czech Republic’s Petra Kvitova (4), Tomas Berdych (4) and Lucie Safarova (13), Canada’s Milos Raonic (6), Denmark’s Caroline Wozniacki (5), Bulgaria’s Grigor Dimitrov (11) and the Croatian Marin Cilic (10).
What works well for many other nationalities does not help the French players. Monaco is surrounded by French territory and can only exist because of French goodwill. The French like to show it and that is why they treat (and tax) all French nationals residing in Monaco as if they were living in France.
As a result, French players choose to move to Switzerland. The top four French players on the men’s circuit – Jo-Wilfried Tsonga, Gael Monfils, Gilles Simon and Richard Gasquet, all decided to avoid the 45% tax rate on their personal worldwide income.
Instead, they are taxed on their living expenses which in many Swiss cantons are assessed as five times the market rate of the rental price of their residential property.
The Williams sisters have their own Monaco back in the USA. The Sunshine State of Florida is one of the seven US states with no personal income tax.
Serena, the long-time number 1, and Venus (15) reside there just like John Isner (16), Russia’s Maria Sharapova (2) and Japan’s Kei Nishikori (5).
The Bryan twins live there too and just like the Williamses. They moved to the East Coast to get out away from California. California has a 13,3% state income tax, the highest of all US states.
Where Do Tennis Players Pay Taxes – Conclusion
No doubt that there are other, non tax reasons for top athletes to live in places like Switzerland, Florida or Monaco: training facilities, great coaches, sun, wine and cheese… but just like all investors, pro tennis players seek to maximize their returns.
This year, the Romanian Simona Halep (3) won the 2015 Dubai Tennis Championship, a prestigious tournament with price money of USD 2 mio. She still lives in Bucharest, but perhaps she would not have mind living in the zero tax regime of the UAE.