Royalty Structures for Latin American Football Players

Transcription

1 Royalty Structures for Latin American Football Players TTN São Paulo Buenos Aires 8-12 November 2012 Robert W. de Ruijter

2 Summary of Presentation Facts & figures The world s most valuable players How it is normally done Main advantage Typical structuring possibilities Tax ruling and other related matters Locations Features of European Royalty Regimes Summary

3 Facts & Figures Brazilian football players leave Brazil on a yearly basis ; ; * Argentinean Football players leave Argentina on a yearly basis ; ; * Image rights are commonly structured through image rights license agreements; Famous football players generally receive image right income from many locations in the world. *Source: Euroamericas Sport Marketing ** Source: Transfer Markt 2012

4 The world s 10 most valueable players Rank Player Country of Origin Club Market Value (millions of EUR) 1 Lionel Messi Argentina Barcelona Cristiano Ronaldo Portugal Real Madrid Andrés Iniesta Spain Barcelona 70 4 Wayne Rooney England Manchester United 65 5 Cesc Fábregas Spain Barcelona 55 6 Kun Aguëro Argentina Machester City 51 7 Falcao Colombia Atlético de Madrid 50 8 David Silva Spain Machester City 50 9 Hulk Brazil Zenit St. Petersburg Robin van Persie The Netherlands Manchester United Neymar Brazil Santos 40 Source: Transfer Markt 2012

5 The world s 100 most valueable players Rank Country Number of Players Percentage Market Value (millions of EUR) 1 Spain Argentina Brazil Germany England The Netherlands France Portugal Italy Serbia Others TOTAL Source: Pluri Data, Transfermarket (11/2011)

6 The world s 100 most valuable players Brazil is the 2nd country with more players among the 100 most valuable in the world, with 11 players, in order: Hulk, Thiago Silva, Oscar, Daniel Alves, Ramires, Marcelo, Pato, David Luiz, Willian, Robinho and Kaká. Together they are worth 355 million, the third highest behind the Argentine; Argentina has 11 players among the 100 most valuable in the world, but in market value occupying the 2nd position, with 388 million. They are: Lionel Messi, Kun Agüero, Ángel di María, Gonzalo Higuaín, Javier Mascherano, Ezequiel Lavezzi, Javier Pastore, Carlos Tévez, Nicolás Gaitán, Lisandro López and Érik Lamela. Falcao Garcia (Colombia), Luis Suarez (Uruguay), Antonio Valencia (Ecuador), Alexis Sanchez and Arturo Vidal (Chile) are the other Latin American players on the list.

7 How it is normally done Brazil: Clubs prefer to pay part of remuneration in the form of image rights; Players typically yield image rights to the clubs; Advantage for player: taxation at 16,33% rather than 27,5% When playing abroad structure in low tax jurisdiction as fund (tax 15%) Agents take 7-10% Funds by clubs Argentina: Clubs - > part of remuneration in the form of image rights; Advantage for player: structuring image rights receipts through licenses; Abroad - > structure in low tax jurisdiction as fund

8 Royalty Company - Main Advantage Main Advantage: Overall reduction of tax costs (withholding taxes) Future estate planning and asset protection By applying: Tax treaties/international tax arrangements (e.g., EC Interest/Royalty Directive) Domestic tax system Resulting in: Low/no withholding tax on royalties to and from Royalty Company Low corporate income tax due

9 A Typical Structuring Possibility 1 Scenario 1: Scenario 2: Licensor IP Royalties 0% RWHT Royalties IP Royalty Company 15% RWHT Licensee IP Royalties 0% RWHT

10 A Typical Restructuring Possibility 2 Scenario 1: Scenario 2: Licensor IP Dividends 5%/0% DWHT Royalties IP LuxCo / SpanishCo Swiss branch IP Allocation Income 0% WHT 15% RWHT Licensee IP (license) Royalties 0% RWHT

11 Royalty Company Tax ruling: currency and bad debt risks taxable income ( spread /arm s length remuneration) validity Further related matters: withholding tax on royalties substance requirements withholding tax on dividends

12 Locations for registering IP Curaçao British Virgin Islands Saint Lucia Panama New Zealand

13 European Royalty Regimes Locations Main locations: The Netherlands Luxembourg Switzerland (Swiss branch with Luxembourg/Spanish head office) Other European Options: Malta Cyprus

14 Choosing locations Tax treaties Taxes on remittances Image rights as royalty incomes bilateral agreements Low taxation on foreign incomes Flexible tax rules

15 Features of European Royalty Regimes 1 Feature NL LUX CH branch Minimum taxable royalty income Arm s length Sliding scale Arm s length Substance required? Yes Formally not required (but recommended) Yes Advanced rulings possible? Yes/APA Yes Yes WHT rate royalty 0% Treaty rate N/A

16 Features of European Royalty Regimes 2 Feature NL LUX CH branch Effective tax rate 25% (20% on ) 5.76% * 12-22% (dep. on canton) 8,5% Fed. WHT dividends Treaty/EU P/S Treaty/EU P/S Treaty Intra-group licensing possible Yes Yes Yes Overall tax burden 25% x income 5.76% x income** 12-22% x income *** * Royalties paid to the relevant Luxembourg company may benefit from reduced withholding tax rates if a treaty or EU directive applies ** Not including 0.5% annual net wealth tax *** In case a 80/20 ruling is obtained the overall tax burden can be lowered to approx. 2-3% x gross income.

17 Summary Intermediate Royalty Company: Tax advantage: Overall reduction of tax costs (withholding taxes on royalties) Non-tax advantages (e.g., centralization of investments and finance activities)

18 Contact details The Corpag Group Anguilla, Barbados, Brazil (São Paulo and Curitiba), Buenos Aires (soon to be opened) the British Virgin Islands, Curacao (formerly the Netherlands Antilles), Cyprus, Luxembourg, Malta, Miami (representative. office), the Netherlands, Nevis, New Zealand, Panama, St. Lucia, Switzerland and the United Kingdom. For more information please contact / Tel