Spain capped off its World Cup triumph with a record payday after defeating Argentina 1-0 in the final. The victory also earned the Spanish football federation the tournament's biggest payout, with FIFA's restructured prize money system handing the Spanish football federation a total of $63.5M. Meanwhile, Argentina will get $46.5M as runners-up.
Apart from performance-based prizes, every nation that qualified for the expanded 48-team tournament received a $2.5M preparation grant from FIFA, along with a guaranteed $10M for participating in the group stage. That means Spain's football federation will receive a total of $63.5M, combining the $51M champions' prize with the participation payment and preparation grant. Argentina's federation, meanwhile, will receive $46.5M, made up of the $34M runners-up prize plus the same participation payment and preparation grant.
The prize money does not go directly to the players. FIFA will pay the money to each country's football federation, which will decide how it is shared among players, managers, and other team members. The exact amount each player or coach receives will depend on the federation's bonus agreements and distribution policies. As a result, individual payouts vary greatly from one country to another.
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The IRS Is Also Among the Winners
Spain may have won the World Cup, but tax experts say that the Internal Revenue Service (IRS) is also one of the biggest beneficiaries of the tournament. With the majority of the tournament played in the United States, FIFA prize money, bonuses, appearance fees, and other tournament-related income earned on US soil may be subject to federal income tax.
According to Robert Raiola, director of the sports and entertainment group at accounting and advisory firm PKF O'Connor Davies, 'It doesn't make a difference who wins the game. The IRS will get a piece.' Raiola said that the tax implications may extend beyond footballers. Coaches, staff members, and referees are also potentially liable for US taxes based on the income that they received during the tournament.
The World Cup Tax Maze
Playing on the world stage may also entail complex financial rules. While players can earn through bonuses, sponsorships, and commercial deals, those earnings can also lead to complex tax issues, especially if the income is generated across multiple countries.
Rating the tournament's tax complexity, Rob Fagan of KPMG's Washington National Tax practice gave it an '8 out of 10.' While top players may have financial advisers, newcomers may find international tax rules daunting. A key factor is whether the player's country has a tax treaty with the US.
Spain has an income tax treaty with the United States, while Argentina does not, although such agreements do not automatically eliminate US tax obligations. Additionally, Fagan warned that FIFA or federation tax exemptions don't necessarily protect individual players, coaches, and staff.
The Complex Tax Reality of World Cup Glory
Spain may have won the World Cup and its top prize, but the final financial outcome still has to follow tax rules. Players, coaches, and staff may still have to deal with federal and state tax rules that could impact their tournament earnings depending on where and how the income was earned.
