Taxation of Sportspersons in Switzerland, including Income from the Exploitation of Image Rights

Football Legal, online Journal

Sportspersons, such as football players, moving to Switzerland or already being Swiss tax residents, should give tax planning some thought. As on the playing field, clever moves are also possible in tax matters. Despite sportspersons often not being eligible for the special Swiss tax regime, the lump sum taxation (which does not allow any professional activity in Switzerland), the situation can also be attractive under the ordinary system. There are several cantons with relatively low income tax rates compared to other jurisdictions. Furthermore, Switzerland has a broad network of double tax treaties. In the international context, income for sports activities exercised outside of Switzerland in a treaty country are exempt from taxation in Switzerland. However, whether it is beneficial to have income allocated to another country for taxation does, of course, also depend on whether and how it is taxed there. Switzerland is quite liberal when it comes to different structuring options. Generally, a sportsperson is allowed to set-up a company, for example for the exploitation of image rights. Making use of a company might optimize the tax situation, but it is not a one-fits-all solution. Whether the advantages prevail should be carefully analysed. Since the overall tax burden substantially varies between the different Swiss cantons, the choice of the place of residence is also an important factor of the tax planning if the sportsperson is flexible in this regard. While not directly connected to the professional activity of sportspersons, there are other aspects of the Swiss tax system which make it interesting, such as private capital gains being generally tax-free or no gift / inheritance tax applying for spouses and in most cases descendants. In any case, sportspersons considering a relocation to Switzerland should proactively analyse different options and their tax and social security situation to put in place the best set-up for their individual situation. This should ideally happen before the immigration to Switzerland and once defined, the planned set-up should be confirmed with the competent tax and, depending on the situation, also social security authorities in advance (ruling). For sportspersons already being Swiss tax residents a thorough analysis of the individual tax and social security situation is a great option to identify potential optimization opportunities.