Foreign Star Companies of Athletes and Entertainers: Italian Source Rules and Tax Treaty Issues

A football star, an Italian football giant and a foreign company. Who gets to tax the income?

The football pitch may have clear boundaries. International taxation? Not always.

A recent Italian tax case involving a top German football player and one of Italy's most iconic football clubs offers a fascinating example of how complex things can get when image rights, foreign companies and cross-border taxation come together.

The real question is not just who receives the income, but who is entitled to tax it.

Can a foreign star company change the tax treatment of income connected to an athlete's activities? How should image rights income be classified? And where do Italian source rules meet — or potentially clash with — Article 17 of the OECD Model?

These are some of the issues that Giulia Sorci and Davide Greco examine in their recently published article in IBFD's European Taxation, looking at the Italian tax framework, relevant case law and the broader tax treaty implications for athletes and entertainers.