Argentina set to lose £10.4m of World Cup prize money after Falklands sign fury | World | News
US taxpayer set to recoup millions from Argentina’s World Cup win (Image: Getty)
Argentina’s football federation faces a staggering multimillion-pound financial hit if it wins the World Cup Final on Sunday, July 19. Angry fans and officials slammed the South American team after the players sparked controversy by unfurling a highly provocative banner about the Falkland Islands at the end of their semi-final against England earlier this week.
But as football fans wait to see if there will be any official sporting punishment for this display, a brutal and stubborn reality awaits the Argentinian camp once the final whistle blows. Even if Lionel Messi’s squad go on to beat Spain and lift the trophy, a brutal tax trap awaiting the US means Argentina are eyeing a massive £.10.4 million of the grand prize disappear That’s exactly how the ultimate champion’s wallet breaks down under U.S. tax law.
Since Argentina’s qualifiers are being played in Atlanta, they must pay an extra 4.99% state tax (Image: Getty)
Tier 1: Association Level (Prize Cash Tax)
By winning the tournament, the Argentine Football Association (AFA) secured FIFA’s maximum winner’s prize of $50 million (£37.15 million). However, the IRS does not double tax the same pool, which means the federation is only taxed on the portion of the money it holds.
Assuming the AFA sets aside $10 million for player bonuses, the association retains the remaining $40 million (£29.72 million).
Because there are no tax treaties, the US government treats the federation as a standard corporation and imposes a flat US Federal Corporate Tax on it of 21%. On top of that, teams are actually required to pay local state taxes based on where they play. Because Argentina’s crucial qualifying matches were played in Atlanta, Georgia, they had to pay an extra 4.99% in state tax penalties on that income.
When combined, the US taxman automatically gets back 25.99% of the federation’s shares:
US Tax Assessment (25.99%): The IRS and the state of Georgia will automatically deduct £7.7 million.
Federation Retainers: AFA’s net earnings fall to £21,996,000.
Argentina’s stars will face a flat US tax rate of 37% as ‘non-resident alien’ workers throughout the tournament (Image: Getty)
Stage 2: Player Level (Team Bonus Tax)
Financial bleeding is now directly reflected in the players’ slice. Under U.S. tax law, individual international athletes are classified as “nonresident aliens” who earn income while serving on American soil.
The bonus pool of $10 million (£7.43 million), distributed equally among the 26 squad players, amounts to a gross of £285,770 ($384,615) per player.
Without a DTA agreement designed to prevent foreign workers from being taxed twice on the same income, Argentine players cannot claim deductions and face the highest U.S. tax bracket for foreign workers; a flat 37% withholding tax from the start.
US Tax Collection (37%): US Treasury seized £2.75 million ($3.7 million) immediately.
Each player has £105,730 ($142,307) deducted from their individual checks, leaving them with a take-home bonus of £180,040 before they fly home.
Argentina could face severe disciplinary action from FIFA over controversial Falklands banner display in Atlanta (Image: Getty)
When you add in the corporate tax levied on the football association and the income tax levied directly on players’ personal bonuses, the total amount received by the US government becomes inevitable:
FA Tax Penalty (£7.72m) + Squad Player Tax Penalty (£2.75m) = £10,473,000
Before factoring in a penny of any disciplinary action FIFA could impose for the Falklands banner incident, the US taxman will automatically deduct just over £10.4 million from Argentina’s moment of potential final glory.
With the UK Government heavily lobbying world football’s top brass over the Atlanta incident and the IRS aggressively enforcing its no-deal rules, Argentina’s controversial World Cup run is fast becoming the most expensive political spectacle in the history of the sport.
