FIFA Fails to Secure US Tax Exemption for World Cup Nations
FIFA has been unable to negotiate a blanket tax exemption with the United States government for the upcoming World Cup, leaving more than half of the qualifying nations to face additional financial burdens. This failure means that many national associations must pay federal, state, and city taxes on their tournament earnings, with smaller countries bearing the brunt of the costs.
Disproportionate Impact on Smaller Nations
The tax burden will fall disproportionately on smaller national associations whose governments lack a Double Taxation Agreement (DTA) with the US. Of the 48 World Cup qualifiers, only 18 have signed DTAs, primarily from Europe, along with Australia, Egypt, Morocco, and South Africa. As a result, tournament debutants like Curaçao and Cape Verde face potentially larger tax liabilities than powerhouses such as England and France.
The exemption does not apply to players' earnings, as athletes and artists are required to pay US federal taxes on performance income, but it covers backroom staff and coaches, who often receive higher payments from their federations.
Financial Strain and Operational Challenges
FIFA's operational budget for each team is fixed at $1.5 million, but the expansion to 48 teams has reduced daily living allowances from $850 in 2022 to $600, despite higher travel and hotel costs in the US. This contrasts with the 2022 World Cup in Qatar, where all 32 national associations received tax exemptions.
Tax consultant Oriana Morrison, who has advised federations like Portugal and Brazil, highlighted the disparity: "Teams from jurisdictions with a US tax treaty, such as England and Spain, will have much lower costs than smaller countries like Curaçao and Haiti." For example, Brazil's coach Carlo Ancelotti faces double taxation on his earnings, while England's Thomas Tuchel is taxed only in the UK.
Complex Tax Landscape Across Host Nations
The situation is further complicated by varying tax policies across host countries. Canada and Mexico have granted tax exemptions to all associations, reducing bills for teams with group games there. In the US, state taxes differ significantly:
- Florida imposes no state tax, affecting games in Miami.
- New Jersey has a 10.75% tax rate, impacting the final at MetLife Stadium.
- California's rate is 13.3%, affecting games in Los Angeles and San Francisco.
Morrison warned: "Many smaller teams, for whom this windfall could have developed local football industries, will be penalized with massive US tax bills, keeping money in the US instead." The US federal corporate tax rate is 21%, with income tax at 37% for higher-rate taxpayers like international footballers and coaches.
FIFA's Response and Future Implications
FIFA declined to comment, but sources indicate the governing body is working with national associations to provide assistance on tax issues. This failure to secure a uniform exemption underscores broader challenges in football politics, potentially affecting the financial sustainability of smaller nations' participation in global tournaments.
