Sprintax | How Players Will be Taxed at the 2026 World Cup

The 2026 FIFA World Cup, set to be held this summer across the United States, Canada, and Mexico, will present players and federations with challenges on and off the pitch. While players strive for on pitch glory, off the pitch this World Cup presents a complex landscape of international tax obligations for players, especially nonresident athletes earning income from participation bonuses or other event-related earnings across the U.S. Understanding these tax rules is crucial for players, federations, and sponsors. So, here’s a breakdown of how tax authorities in the U.S. could treat player income and what international stars should know before stepping out onto the pitch.

U.S. taxation of nonresident athletes: the basics

Under U.S. tax law, any nonresident alien who earns U.S.-sourced income may be subject to taxation by the United States’ Internal Revenue Service (IRS). This summer, that will include any footballers who earn money connected to a match or World Cup event, as that portion of their income will fall under IRS scrutiny. This can include:

• Appearance fees and match bonuses – Payments for appearances and any bonuses related to in-game performance
• Prize money – Any prize money related to team performance at the World Cup
• Sponsorships and endorsements – Income tied to promotional work, interviews, and brand deals that are directly related to U.S. events or American audiences
• Merchandise royalties – Revenue from the sale of personalized jerseys, posters with player imagery, or digital products (such as NFTs) sold at World Cup matches
• Licensing and image rights fees – Payments from U.S.-based companies for using a player’s likeness in video games, advertisements, or collectables
• Streaming and digital content – Income from match-related content, social media, or streaming services targeting U.S. viewers

If no tax treaty applies, the default IRS rule requires 30% withholding on gross income. Without proper planning or documentation, this means that nearly one-third of a player’s World Cup-related earnings could be withheld before they even leave the pitch.

How tax treaties and planning can help

The United States maintains tax treaties with many of the countries competing in the World Cup this summer. These agreements have been designed to prevent double taxation and often include provisions specifically addressing athletes and entertainers. Depending on the treaty, certain benefits might apply such as exemptions for income from short-term appearances in the U.S. or limits to U.S. taxation on income above a certain threshold. Other benefits include deductions for reasonable expenses and taxation only in the player’s home country upon meeting specific criteria. However, these benefits are not available automatically. To access these benefits, players must submit the appropriate documentation to claim treaty relief, typically Form 8233 (for personal service income) or Form W-8BEN (to claim treaty rates on the other types of income). Without timely submission, the payer must withhold the full 30%, even if treaty relief would otherwise apply.

Withholding and reporting responsibilities

For payments connected with a World Cup match hosted in the U.S., the payer—this could be the national federation or a sponsor for example—is treated as a withholding agent under U.S. tax law. This means the payer must withhold the appropriate amount of tax and report the payment to the IRS using Forms 1042 and 1042-S. If withholding is handled incorrectly, the IRS may hold the payer liable for the unpaid tax, along with penalties and interest. Because of this, both national federations and sponsors need to ensure that tax documentation is collected well in advance and that accurate records of all payments and reporting are maintained.

Deductible expenses and recordkeeping

Although withholding is generally calculated on gross income, athletes may be able to reduce their ultimate tax liability by claiming allowable deductions, to the expenses which are effectively connected with U.S. income, when filing their tax return with Form 1040-NR.

Common deductions for athletes include:

• Agent and management fees
• Personal training and conditioning costs
• Equipment and gear not provided by national federations or sponsors
• Legal, accounting, and professional services directly connected to work carried out in the U.S.
• Costs associated with marketing their personal brand

To benefit from reduced tax liability, good recordkeeping is essential. Receipts, contracts, and invoices should be carefully maintained and organized by event. Insufficient documentation could see the IRS deny deductions, increasing the amount of income considered taxable. It’s important to note that deductions can only be applied if the athlete themselves pay the expense. Expenses covered by the organizing body, national federation, or sponsor, cannot be deducted.

Central Withholding Agreements (CWAs)

Central Withholding Agreements provide an avenue for high-earning footballers playing at this summer’s World Cup to negotiate a reduced withholding amount with the IRS in advance of the tournament. This arrangement allows withholding to be calculated based on estimated net income, rather than gross. It requires advance approval and detailed financial planning but it can significantly improve cash flow. For high-earning, globally marketable footballers with substantial U.S. endorsement income and significant deductible expenses CWAs can be particularly beneficial.

Practical tips for players and federations

The World Cup in North America will bring an increased level of exposure for competing players, but it will also come with a whole new set of tax responsibilities, especially for players and federations competing in the United States!

To stay ahead of the curve, they will need to:

• Submit Form 8233 or W-8BEN before payment to claim treaty benefits.
• Maintain detailed income and expense records related to their time in the U.S.
• Consider applying for a Central Withholding Agreement if large earnings are expected.
• Use a tax agent to calculate withholding, confirm treaty eligibility, generate IRS forms, and manage U.S. compliance efficiently.

The final whistle: plan ahead to avoid tax penalties

The financial rewards associated with the World Cup are massive, but so too are the risks of tax mismanagement. With proper preparation, players can take advantage of tax treaties, avoid unnecessary withholding, and remain compliant with both U.S. rules and the tax laws in their home countries. As the World Cup kicks off across North America, the best tactic is simple: leave New Jersey with the trophy in hand—and without an unexpected tax bill waiting at full time!

Compliments of Sprintax – a member of the EACCNY