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Income from the use of the sportsperson’s image in an international context
From a French tax point of view, unfortunately, the legislator has not provided for a specific tax and social regime for the income earned by sportsmen and sportswomen from their image and fame. The most common question is whether this type of income should be considered as a salary (subject to social security contributions) or as a fee subject to income tax in the category of non-commercial profits (BNC) (and social security contributions of 17.2%). In fact, although the principle is that the exploitation of the athlete’s image generates income taxed under the BNC category, it sometimes happens that sponsorship contracts are reclassified as modelling contracts, with significant tax and social consequences. Modelling contracts are considered to be employment contracts, with remuneration subject to the tax and social security rules of employment. As a result, case law tends to define the boundaries of the services that can fall within the scope of modelling contracts on the one hand and sponsorship contracts on the other. In this respect, a contract with an equipment sponsor is more likely to be treated as a salary for the athlete (Speedo judgment of 23 June 2002, case no. 21.10.416).
The OECD Model Tax Convention contains an Article 17 dedicated to the taxation of the income of artists and sportsmen. Paragraph 1 of this article contains the principle of taxation of income derived from the exercise of artistic or sporting activities in the State where these activities are carried out. The OECD Commentary clarifies that the territoriality rule in Article 17, §1 may apply to income derived by an athlete from the exploitation of his or her fame if such income has a "close connection" with the athletic performance. In the absence of such a connection, Articles 7 and 15 of the Model Convention should apply. However, France has reserved the right to include an additional paragraph in its tax treaties allowing it to tax, as the source state, income derived from services closely linked to the professional reputation of an athlete and carried out in France.