Believe it or not, there are strong ties
between football (soccer) and the offshore world.
First becoming popular “thanks” to the
Panama Papers leak, football public figures – including players and officials –
and shamed publicly due to their involvement in the use of tax havens in
their personal financial management.
However, it’s not a new thing, really. Celebrities, famous sportspeople,
billionaires and political figures are using offshore structures for
decades. Just like you and me, it’s
their endeavor to protect their assets. They even have more legitimate reasons to do that than the rest of us:
Their public images are under constant attack and lawsuits seem bound to happen
anytime they say or do something – just because they are famous and
And on top of that, they’re not against the
law in the process.
So, let’s dig deeper about the involvement
of footballers in the offshore world – why they do it and how.
Footballers + offshore structures = image rights protection
Perhaps the most famous footballer who
involves in offshore structures is Lionel Messi. The Argentine footballer who
played for Barcelona in the Spanish Premier League is one of 20 top footballers
who was named in the leaked Panama Papers.
He and his father were accused for
committing tax fraud, ‘hiding’ EUR4.1 million in taxes via shell companies in
Belize and Uruguay. He has had his trial and denied his involvement in the tax
fraud accusation. He was found guilty and
sentenced to 21 months of imprisonment, served under probation.
But Messi and the 20 top footballers are
not the only ones. In reality, there are
hundreds if not thousands who engage in offshore activities. Just like Messi, but choosing to
take the tax avoidance path, instead of tax evasion one, some other footballers are using shell
companies to protect their image rights.
And 180 of such footballers were just
the news about Premier League footballers who involved with shell companies –
180 of them – has become viral. They
allegedly use shell companies to handle their income related to image
rights. It’s said that using shell
companies cut their income tax by half – legally.
Wayne Rooney, Theo Walcott, Joe Hart, Danny
Welbeck and Gareth Bale are some well-respected names in the Premier League who
use shell companies.
But why do they get involved in shell
companies? How do they do it? Read on.
Here’s why they do it
As mentioned above, just like you and me,
top footballers want to secure their assets in offshore structures. As most
footballers are only having 15-20 years of playing career, they need to be
smarter in managing their assets so that they can be financially independent
after they retire.
But why image rights? Why do they need to
Very much similar to others in professional
sports, footballers’ most valuable assets are their image rights. The provision of image rights is protected by
laws, including the commercial exploitation of the footballers. Having Lionel Messi to endorse your product
is very expensive, but the return on your investment due to Messi’s popularity
will be many times over.
Unfortunately, just like any other brands
and intellectual properties, the image rights are often misused – by the
endorsed brands, competitors, copycats, and so on – not mentioning attracting
lawsuits, which are sometimes for some absurd reasons. In such situation, footballers’ income from
their image rights is constantly under threat. They need ways to protect their most valuable assets, and one of them is
via the use of offshore structures, typically shell
Here’s how they do it
The footballers took advantage after UK tax
authorities (HMRC) were allegedly agreed to a non-formal deal, which
essentially allowing popular footballers to have a fifth of their salaries as
considered as payments for image rights.
Making use of the agreement, the
footballers are sending the one-fifth of the salary mentioned above to their
Here’s how the simple math that makes the
above arrangement works: UK corporate tax is 20 percent. UK personal tax for
high income is about 40 percent. So,
you’re basically cutting your income taxes in half for the one-fifth of the
Not much, but it’s quite an amount of money
saved. And it’s a legal tax avoidance
Not only that, many popular Premier League
footballers enjoys income outside his salary, typically via product
endorsement. When carefully structured,
shell companies can secure their off-the-field income and reduce their taxes,
Of course, we can’t simply copy what the
footballers are doing with their tax planning, as their cases are unique (I
don’t think most of us will ever need to protect our image rights.) However, we can get some ideas on how to use
offshore structures to legally avoiding taxes and, at the same time, protecting
For more information on how to setup offshore structures of your own, please visit our website at ICOServices.com.