Overseas withholding tax for UK entertainers and sportspeople

International performance is essential to the livelihoods of many UK entertainers and sportspeople. To get the most out of it, it’s important to be prepared for the financial complexities, especially where they differ from country to country. One of these is withholding tax.

What is withholding tax?

Withholding tax (WHT) refers to tax being withheld from income due to the recipient by the payer, and directly paid to the tax authority in the country where the performance, appearance or competition took place.

WHT is also referred to as deduction of tax at source (i.e. from the payer of the income), or payment on account against the recipient’s final tax bill.

The UK operates WHT for non-UK resident entertainers and sportspeople for performing, appearing or competing in the UK. It applies to payments over the personal allowance (£12,570) and is usually worked out at the basic rate of income tax (20%). We have more information on UK withholding tax here.

How does withholding tax differ outside the UK?

Some countries don’t operate WHT, e.g. Denmark and Ireland. For those that do, there are a host of variations.

In South America and mainland Europe, most countries tax the gross income which the visiting performer or sportsperson will receive, but at a lower rate. Countries operating on this basis don’t look to tax secondary income from performances e.g. sponsorship and merchandise.

Like the UK, some countries use a tax on net profit basis, e.g. Australia and the US. Such countries look to tax the net profit of all income associated with a performance.

This net profit basis also has consequences for the timing of filing. For example, if you’re a UK-based singer touring the US, an application must be filed no later than 45 days before the first performance there. That ensures the graduated tax rate on net profit. However, missing that deadline would lead to a rate of 30% WHT on gross income.

Under the double taxation treaties which the UK has with numerous other countries, reduced or zero rates of WHT may apply. The relevant tax authorities would need to receive and accept an appropriate claim.

A UK-based performer or sportsperson planning a multinational tour may face many such variations in WHT and the associated processes. It’s best to seek guidance on your destinations’ tax regimes in advance. A tour has enough surprises in store without tax being one of them!

What do WHT processes involve?

To be fully prepared for WHT, the aspects you should account for include:

  • Pre-tour budgeting and cashflow forecasting
  • Conversations with local promoters in the host countries
  • Contracts, applications and other documentation
  • Deadlines for providing and filing relevant forms
  • Necessary recordkeeping before, during and after the performance(s)

With so much to consider, having specialists who can (literally) account for WHT on your behalf will ensure that you don’t drop the ball.

How BKL can help

Our music, media, entertainment and sport team include highly experienced specialists from Alan Heywood & Company, who joined BKL in March 2024. Together, we have decades of expertise supporting people, groups and organisations across the sector.

We can help you and your clients with the entire WHT process. Our assistance for music and entertainment clients has included:

  • Dealing with complex matters for touring artists, including preparation of accounts in connection with shows in France to successfully reduce the WHT paid
  • Working with several actors who are filming internationally, and with their foreign advisers, to make sure the UK and international structure minimised WHT costs

Through our connections to accountants and tax advisers overseas, we can call on local support from experts in many other countries and territories. Our membership of the International Sports Tax Association (ISTA) adds to this support.

 

 

To find out more, please get in touch using our enquiry form.

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BILSHAN MENSAH

Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

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While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.

ELANA DIMMER

Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.

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