Irmantas Misiūnas. Do champions pay taxes? | Business

The activities of individual and team sports athletes are regulated by the Sports Law. Athletes can also enter into employment contracts or sports activity contracts and receive income on that basis. In addition, athletes are encouraged in the form of state scholarships, state bonuses, prizes for the highest achievements and medals in sports competitions.

Of course, athletes have opportunities to receive additional income related to sports, for example, to train children individually, or to receive other income, for example, to be the face of advertising for a brand.

GPM paid from athletes’ income is important for the budget of the municipality where the athlete lives, because municipal budgets are primarily formed by GPM income. Therefore, municipalities are motivated to promote sports activities. But where do you prioritize if different incomes are taxed differently?

Those athletes who represent clubs and participate in championships or competitions and enter into employment contracts with a sports organization pay about 40% of their income to GPM and “Sodros” and health insurance premiums. In professional team sports, a specific working relationship develops between the athletes and the sports organization.

At that time, those athletes who enter into individual activity contracts are taxed with a significantly lower tax burden. For example, if a professional athlete receives 50 thousand per year. EUR salary from the basketball club, he will pay EUR 20,000. EUR of taxes, while the person carrying out individual activities – only EUR 11,000. euros or 22%.

If the athlete receives additional sports-related income or receives constant advertising income, then lower rates apply to him – it is from 50,000. EUR 11,000 of income will also be paid. euros or 22% of various taxes. Non-permanent, casual income may be taxed at an even lower rate of 15%.

Champions do not pay taxes, because state bonuses, state scholarships, gifts and prizes awarded by federations for achievements are not taxed by GPM, “Sodros” or health insurance premiums. Athletes participating in the system of high sports excellence, who go to sports camps and receive income, do not pay taxes either, because these compensations are also tax-free – similar to how a company employee who goes on a business trip and receives a per diem does not pay taxes.

In summary, the sports system created and maintained by the state and municipalities provides opportunities for athletes not only to receive state funding, but also to receive steady income from work in sports organizations, participating in club championships, and receiving other individual sports activities or even non-related income. Investments in athletes can return to the state and municipalities not only in the intangible form of prestige, honor or greater recognition of Lithuania, but also in the material form of taxes.

It is also important for this that in our country the guidance of a two-way sportsman’s career should be encouraged. The career of a high-performance athlete lasts on average from 10 to 25 years, an unimplemented two-way athlete career program or the lack of a long-term motivational system encourages some athletes to end their careers earlier than they should. Often, after completing a successful sports career, an average 35-year-old athlete is left for further independent integration.

In the world, it is common for athletes to receive income not only for sports activities, but also for economic activities outside the field – advertising, development of their own brands or ambassadorship of other brands.

For example, it is estimated that Michael Jordan earned about 90 million during his NBA career. US dollars, and his income from the contract with Nike to develop the Air Jordan brand could have brought him about 1.3 billion. US dollars.

Such a direction of activity is beneficial to the athlete himself, as it monetizes the accumulated social capital and ensures income even after the suspension of sports activities, but the state investing in the athlete’s career is no less interested in the tax return.

In other words, the success of a two-way sportsman’s career is a success for both the state and municipalities through returning taxes, so in order to create maximum economic value it is important to invest not only in high sportsmanship, but also in sports management.