Premier League Exodus: New Tax Implications Emerge
Underneath the rich allure of the Saudi Pro League, lies a web of potential tax implications that could land English stars and managers in an ocean of fiscal turmoil. It has come to light that those flocking to the newfound footballing wealth of Saudi Arabia could face staggering tax bills worth millions if they were to return to English shores prior to 2025.
A particularly striking case is that of Jordan Henderson, a player rumoured to be presented with a whopping £700,000 per week tax-free deal by the Saudi Pro League. However, to behold such a treasure chest, he would need to anchor himself in the Middle East for close to two years. The tax rules stipulate that Britons leaving to work overseas must remain absent from their home turf for a full tax year, or part with a daunting 45 per cent of their earnings upon early return.
A Tactical Gamble: April 2025 or Bust
For those players daring enough to join the Saudi Pro League now, the pursuit of fortune necessitates a stay until at least April 2025. A fleeting season in the Middle East, followed by a quick pivot back to the Premier League, would fail to yield the desired windfall. In stark contrast, the projected earnings, when juxtaposed with the top tax rate, can drop from a sky-high £58.8 million to a mere £32.34 million.
Elliott Buss, a tax aficionado and partner at UHY Hacker Young, clarified the rules succinctly: “A complete tax year outside of the country is mandatory. Though sportspeople can revisit family in the UK, the duration must not exceed 91 days in a tax year, lest they risk losing their tax-free status.”
A Test of Tenacity: Managers in Uncharted Waters
Whilst players can count on the duration of their contracts, the unpredictable nature of the coaching world could see managers, like Steven Gerrard and Nuno Espirito Santo, facing the axe prematurely. In such an unfortunate event, they may find themselves trapped in Saudi Arabia to avert paying tax.
To truly maximise the tax-free gains, it becomes necessary for players to sever their UK tax residency and become residents of Saudi Arabia, thus entering their 0 per cent tax realm. Sofia Thomas, partner at Juno Sports Tax, remarked, “It isn’t enough to just move to Saudi Arabia. To truly enjoy the 0 per cent tax advantage, you must establish non-UK residency and Saudi residency.”
Past cases highlight the potential pitfalls. Mirko Vučinić, former Juventus player, was pursued for €5.85 million by Italian authorities for earnings while playing for Al Jazira in Abu Dhabi. His case clearly demonstrated the need to break home residency while playing abroad.