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Last weekend, several news items were published referring to a change in interpretation by the Spanish tax authorities that, if applied, will decide the taxation in Spain of all automobile racing drivers and motorcycle racers—including non-residents—for income obtained from races held on Spanish soil.

This interpretation is familiar to the motor sector, as countries such as France, Germany, India, the United Kingdom, and the United States have already been applying the criteria for years and consequently all racing drivers and motorcycle racers pay taxes in those countries on the part of their income that is generated there.

Bearing in mind both the internal regulations and the double tax treaties in place, in certain cases Spain could be able to tax drivers and racers on the income obtained from their sporting activities in its land.

In the case of the income of sportspeople, the distribution of the tax jurisdiction is made on the principle of shared taxation between the person’s state of residence and the state in which the sporting event takes place. In principle, this income is not limited to what is obtained by each team but could also encompass revenue from the exploitation of the driver’s or racer’s image rights (at least the sporting image).

Obviously, the principle of territoriality implies great complexity (that we have already seen in the countries mentioned above) when quantifying income exclusively generated on Spanish soil, which could be done based on several variables, including the number of important prizes obtained, and the presence of the sportsperson in Spain.

Given the importance of the matter (both in terms of liability and quantity), this is a good time for sportspeople to study their possible taxation in Spain, both regarding past tax years open to inspection and the years to come.

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Autores:

Socio

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roberto.alvarezmartinez@cuatrecasas.com

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santiago.mosquera@cuatrecasas.com

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