Tax Planning Strategy 162 | Endorsement Income
Most forms of income earned by professional sportspeople is personal services income (PSI) and is assessed to the sportsperson individually. This includes salary, competition winnings, prizes, and appearance fees. This income cannot be split with family members or taxed at company rates.
In contrast, all endorsement income is genuine business income generated by the goodwill of the sportsperson’s name and image. This income is generated by the goodwill asset, rather than by the direct personal exertion of the athlete. As such, this goodwill asset can be assigned to another entity by deed so that the income is redirected to that entity.
The advantages of having the endorsement income contracted through a separate entity include:
- The limited liability of the entity protects the individual’s personal assets from any contract or business disputes.
- Ability to split income with family members through a trust or have the income taxed at 27.5% in a company.
- Prestige of having a separate management company.
Similar posts you may like
- Ireland
Capital city: Dublin Currency: Euro (€) Read more
- Legal Reasons to Use a Tax Haven
Without doubt, the dominant legal reason to use tax havens is to save tax. Many taxpayers, especially multi-national corporations, can legally save tax by Read more
- Double Tax Treaty Manipulation
Double taxation is the levying of tax by two or more jurisdictions on the same declared income, asset or financial transaction. It may occur Read more
- Tax Planning Strategy 171 | Income Splitting
This strategy involves ‘evening up’ the marginal tax rates between spouses. Tax is saved if income can be moved from the spouse Read more
"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2