2023 has unquestionably been a landmark year for the world of sports, with Saudi Arabia and its prestigious Public Investment Fund (PIF) making waves. Previously known for its oil riches and iconic landmarks, the country is now gradually etching a reputation as a hub for top-tier sports. With its early ventures into golf catching global attention, Saudi’s real game-changer was its strategic investment in football. However, beneath the glamour and glitz, one can’t help but ponder: is the nation’s goal purely about sports, or does it serve a broader vision?
Following the trail blazed by the legendary Cristiano Ronaldo, many football stars, especially those shining in the English Premier League, are now gravitating towards Saudi shores. Such moves aren’t solely for the love of the game. The financial incentives being offered in the kingdom are hard to resist. Players, both rookies and veterans, are finding the prospect of substantially larger salaries too enticing to ignore. But what truly tempts many is what remains of their paycheck after taxes. In stark contrast to the UK, where players see nearly half their income dwindling in taxes, Saudi Arabia presents a haven with no income tax on players.
While the no-tax policy is attractive, it’s essential to dig deeper into the intricacies of taxation for a clearer picture. UK-based players aspiring to join Saudi teams must remember the tax ropes they might still be tied to back home. For the fiscal year 2023-24, a significant portion of these players will likely remain under the umbrella of UK tax residency. This status implies they’d still be accountable to the UK tax system for their global income until 5 April 2024.
Navigating the Saudi tax system might seem straightforward with its no-income-tax allure, but the real challenge lies in ensuring a clean break from UK tax residency upon their departure. This break is not merely a matter of paperwork but involves meeting specific criteria.
For many players, the path to tax clarity revolves around the “split-year treatment”. In essence, this treatment allows players to divide their tax year between the UK and another country, ensuring they’re taxed relatively based on their time in each territory.
To tap into this treatment, many players aim to meet the “starting full-time work overseas” benchmark. However, this is just the beginning. An essential caveat is that they must sustain their overseas employment status till at least the summer 2025 transfer window. Furthermore, their time allocation post-departure becomes pivotal. For instance, a July 2023 departure for Saudi only permits a player 67 nights in the UK until 5 April 2024. Between 6 April 2024 and 5 April 2025, this narrows to a maximum of 91 nights.
But not all players are painted with the same brush. For those who haven’t set deep roots in the UK, either by virtue of not being born there or not having settled there long-term, there’s potential respite. They could find shelter under the remittance basis of taxation. Simplified, this system mandates tax only on income brought into or spent in the UK. Yet, this doesn’t negate the significance of the split-year conditions, especially for players keen on channelling their Saudi earnings back home.
Beyond salaries, Saudi Arabia might also be a strategic move for players wishing to restructure their assets, including image rights. However, this requires careful planning. To achieve this without being ensnared in UK tax liabilities, players need to maintain a non-UK tax resident status for a lengthy 5 to 6 years.
Saudi Arabia, with its sporting ambitions and enticing financial packages, is undoubtedly a compelling destination for many athletes. However, the journey is strewn with tax complexities that demand careful navigation. Understanding tax residence, domicile complexities, and the interplay between different tax jurisdictions is crucial. Every player’s situation is unique, and as such, seeking comprehensive, bespoke tax advice is paramount. Cubed Consultancy stands ready to guide players through this maze, ensuring they make informed and beneficial decisions. For a tailored consultation, don’t hesitate to reach out.
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