FIFA will pay $50 million to the RFEF for the World Cup title. A viral hoax claimed that the IRS and Hacienda would take almost everything, but the tax reality is more nuanced.
The second World Cup won by Spain in the United States has triggered a wave of tax calculations on social media. A viral message claimed that the US IRS would take almost half of the $50 million paid by FIFA and that, upon arriving in Spain, Hacienda would apply an additional 54%. However, the reality is not so straightforward.
The prize is not awarded directly to the players, but to the Royal Spanish Football Federation (RFEF). It is the Federation that must cover expenses, internal commitments, and the bonuses agreed with players and coaching staff. Therefore, neither the IRS nor the Tax Agency automatically taxes the $50 million as personal income for the players.
The bonus per player is around €754,700
According to estimates published after the final, approximately 45% of the prize would be allocated to the squad. This would leave a gross bonus close to €754,700 per player, although the final figure will depend on the agreed distribution and the number of beneficiaries. The individual obligation to pay taxes arises when each player receives their remuneration.
For the interested reader, this means that the actual amount on which taxes will be applied is much lower than the $50 million. The Federation distributes the money according to internal agreements, and players only declare what they receive.
The United States claims its share with the 'jock tax'
The general rule in the United States is clear: foreign athletes are taxed on income generated from performances in US territory. The World Cup was held in three countries, but the final took place in East Rutherford, New Jersey, where Spain defeated Argentina 1-0. This allows the United States to demand taxes on the portion of the bonus attributable to the activity performed there.
However, the claim that the IRS will take “almost half” of the entire prize is excessive. Taxation depends on how the income is classified, the days worked in each jurisdiction, the agreement between Spain and the United States, and the structure used by the Federation to pay the bonuses. Not all of the prize is necessarily US income, nor is everything subject to the maximum federal rate.
The federal burden may be supplemented by state tax. New Jersey applies the well-known 'jock tax', used by numerous states to tax visiting athletes. This tax levies income earned within its territory by non-resident taxpayers and is not obliged to apply the international tax treaties signed by Washington. The Administration must determine what proportion relates to the activity performed in New Jersey, compared to matches played in other states, Canada, or Mexico.
Hacienda does not charge the same amount twice: this is how the double taxation deduction works
Players who are tax residents in Spain must include the bonus as employment income in their income tax return. The maximum marginal rates can range from approximately 45% to 54%, depending on the autonomous community. However, the marginal rate does not equate to the effective percentage on the entire bonus. Additionally, taxes paid in the United States may entitle players to a deduction for international double taxation, within the limits established by Spanish regulations.
The consequence is decisive: Hacienda does not simply apply 54% on what remains after the IRS. It calculates the Spanish quota and deducts, when applicable, part of the foreign tax already paid. The result will depend on each player's residence, the autonomous community where they are taxed, and the documentation that proves the taxes paid in the US.
For the fan following these figures, the message is clear: the taxman does not take even half of the total prize. The effective taxation will be much lower than the 50%+54% circulating on social media, thanks to mechanisms to avoid double taxation. The next time you see an alarming tweet about taxes, remember that the tax reality is often more boring – and less dramatic – than it seems.
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