Source: REUTERS/Hannah McKay
[Saba Sports News] According to Brazilian media reports, the bonuses from the Club World Cup are not as high as they appear on the surface. The FIFA has not yet completed communication with the U.S. regarding tax issues. The host country of the World Cup offers tax-free bonuses, but this does not apply to the Club World Cup. To avoid the impact of U.S. taxes, FIFA had previously paid some clubs an entry fee before the start of the Club World Cup. Due to unclear tax rules, each case requires special handling, and there is currently no uniform tax rate. The U.S. tax system involves both federal and state-level taxation. Brazilian clubs had considered registering companies abroad (but later abandoned the plan), while another option was to adopt the “effectively connected income” (ECI) tax model. Tax lawyers Marilia Cavagni and Bruno Faccin noted that under this model, the tax rate is usually 30% of the profit. They stated: “Other payments, such as logistical support fees paid by FIFA, or income from activities outside the U.S. (such as image rights) should not be taxed by the U.S.” They emphasized that clubs must improve their financial and accounting management, accurately report these expenses to avoid misapplication by the IRS. In addition, Brazilian clubs will also have to pay a 15% corporate income tax in Brazil.