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Taxation: Artist and sportsmen, example of the problem

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Par   •  24 Octobre 2016  •  Étude de cas  •  416 Mots (2 Pages)  •  495 Vues

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Artist and sportsmen example of the problem

When artistes and sportsmen perform abroad they pay income tax in two countries. Not only in their residence country on their world-wide income, but also in the country of performance. Reasons for this source tax are that countries want to eliminate the risk of tax avoidance, because the foreigner would not mention the income in its tax return in the residence country or would have moved his residency to a tax haven without income tax, such as Monaco. Double taxation is likely when the source country has the right to tax the income because the residence Tax Advisers countries will also this income as part of the world-wide income.

It exists two ways to eliminate this double taxation:

• tax credit for the foreign tax

• tax exemption for the foreign income

They need to pay income tax in the country of performance, regardless of the general rules for companies, self-employed persons or employees. Main reason for this special treatment is that top artistes and sportsmen are very mobile and can easily move their residency to a tax haven such as Monaco, which levies no income tax. Most countries have followed this, also continental European countries, only some countries prefer to use the exemption method for artiste performance income that may be taxed under

It is difficult to make the right decision concerning the application of conventions.


Our opinion concerning Double taxation

In this final part we will outline our views on the issues raised.

To start, we noticed that today many companies, especially start-ups and innovative companies decide to settle in Ireland due to the low tax rate on businesses.

Today the state of things and with the strong crisis that Europe knows the companies try to save money by all means.

Companies do not necessarily deviate from the law but are trying to find ways to achieve their financial goals.

Ourselves, if we create an innovative company, we will think about settle it in Ireland to reduce expenses. It could be more interesting for us.

Moreover there is a bad management of taxes between countries, also it is not very clear what happen and how many you need to pay. Conventions are not easy to understand to applicate and there are a lot of special cases (deduction, exemption…).  

Last point we want to express our opinion is the ethics, because there are a lot of companies who tries do escape and avoid taxes settling the offices in some particular location, called tax heavens.


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