The line judges may call the shots on the court but it’s clear that Spanish tennis star Rafael Nadal is calling the shots off the court. The world’s second-ranked men’s tennis player has announced that he will not play the Queen’s Club tourney next year in Britain, citing that country’s tax laws as a deterrent. Instead, he says, he’ll play in more tax friendly Germany that week.
Queen’s Club is considered the warm-up to Wimbledon. Nadal has played in the tourney almost every year for the past six years; he had to bow out in 2009 due to injury. But this year, he worries that he will lose money if he plays Queen’s due to Britain’s tax laws.
The Brits, like the US, attempt to tax global income. However, under British tax law, the amount of tax due is pro-rated based on the number of events that an athlete competes in; this is in addition to a 50% tax rate on appearance fees. If, for example, Nadal participates in ten tournaments in 2011 and one of those tournaments is located in the UK, the Brits take the position that they are more or less entitled to 1/10 of Nadal’s worldwide income (some exceptions apply but you get the idea). The tax is imposed even though the athletes, like Nadal, may not live in Britain.
Clearly, the law isn’t popular. It has kept big names like Spanish golfer Sergio “El Nino” Garcia and Jamaican sprinter Usain Bolt out of the country for nearly every event. In fact, Bolt has indicated that he will only race in Britain for the Olympics – and not any of the matches leading up the Olympics – which sent Britain’s Tax Minister scurrying for a fix. In fact, in order to ensure that athletes actually show up for the 2012 Olympics, the British taxing authorities have agreed to a limited exemption to the tax rule.
In the past, the tax office has also considered a special tax break for the purposes of luring Tiger Woods to the country (though not so necessary these days, huh?) for the Ryder Cup. It wasn’t the only concession the taxing authorities considered: after Wembley was passed over as the host for the 2010 Champions League final, changes were made to exempt visiting footballers (that’s soccer to you and me) from the tax laws. As a result, Wembley hosted the 2011 Champions League final on May 28 of this year in which Barcelona competed (and won) against Manchester United. It was the first European Cup final held in the new Wembley stadium.
Will UK make such an exception for Nadal? The pressure is on but so far, there’s no indication that anything is seriously being considered. Of course, tennis fans need not totally despair: Nadal isn’t boycotting Britain altogether. He has announced that he will indeed play Wimbledon and the ATP World Tour finals, both of which are held in Britain.
