THE NETHERLANDS: Court allows exemption for training days outside the Netherlands for professional soccer player likewise as for ice skater
Source: Decision of the Court of Appeal of ‘s-Hertogenbosch of 29 June 2012, Nr. 12/00024.
By Rijkele Betten
The Court of Appeal of ‘s-Hertogenbosch decided on 30 November 2011 that a professional soccer player was entitled to application of the exemption with progression method for the part of his salary that was attributable to training days in Spain and Thailand. The player earned a yearly salary of EUR 764.926. During 2002 the professional soccer club made two training sessions abroad. One was held in Spain during 10 days, and another period was spent in Thailand for 12 days. During both periods friendly matches were played, which were open to the public.
According to the tax treaties concluded by the Netherlands with Spain, respectively Thailand the source country may levy tax on income earned by sportspersons from the personal activities exercised as such, and the residence country has to exempt such income. These provisions are in line with the OECD Model versions.
The Lower Court of Breda had held that the friendly matches could not be classified as performances meant for an audience. And consequently, then the training days cannot be attributed to performances and the salaries attributable to these days could not be exempted under the respective tax treaty articles.
On 3 May 2012, ten years after the pertinent year (!), the Court of Appeal of ‘s-Hertogenbosch dealt with the case. At the hearing neither the taxpayer, his advisor nor the tax inspector appeared. Apparently only the taxpayer and advisor had informed the Court at beforehand that they would not appear.
The Court of Appeal held in favour of the taxpayer and stipulated that the attributable salary should be exempted. The main argument of the Court was that since the Netherlands Supreme Court had in its decision of 9 February 2007 (Nr. 41.478) allowed an exemption for a professional ice skater for training days in Spain. The Court of Appeal explicitly mentioned that indeed – as the tax inspector had claimed in his written arguments – there is a risk of international double exemption, but the Court also held that this risk must be held acceptable in the light of the currents state of the Netherlands jurisprudence.
The period during which appeal with the Supreme Court can be filed is still pending. If the Netherlands tax authorities no longer want to apply an exemption with progression for salary attributable to training days (under the treaties which allow for an exemption), they will need to renegotiate the pertinent treaties, or bring this case for the Supreme Court and ask them to reconsider their decision from 2007. Without further motivation it seems not likely that the Supreme Court would change its mind. It appears to be rather striking that a case concering the tax year 2002, with a clear Supreme Court decision from 2007 still takes until 2012 to be decided. And perhaps this is still not yet the end of the story . . .