Upsetting the status quo: cases where football intermediaries’ commissions should be taxed in the State of the transfer

by Panagiotis C. Roumeliotis[1]



Sports agents act, first and foremost, as intermediaries between sportspersons and sport clubs with a view to employing a sportsperson. However, they usually engage in a broader range of activities, including the conclusion of different kinds of contracts on behalf of the sportsperson (sponsoring contracts, endorsements, and others)[2] and manage things off the field, so that the sportspersons have the luxury to focus on their on-field performances.

Since the development of modern organised football, players’ agents have been active and indispensable in the industry. In the Bosman aftermath, the agents’ activities increased and, hence, FIFA delivered the core for the regulation of players’ agents’ activity since the mid-nineties, by means of a licensing system and the Players’ Agents Regulations.[3]

On 1 April 2015, FIFA issued a new regulatory benchmark,[4] related, inter alia, to fees paid to intermediaries by clubs and players when concluding employment contracts and transfer agreements, with the objective of improving transparency regarding remuneration and involvement of intermediaries. National associations are required to implement and enforce at least the minimum standards in accordance with the duties assigned in the Regulations.[5]

The current FIFA landmark Regulations on intermediaries define the intermediary as follows:

a natural or legal person who, for a fee or free of charge, represents players and/or clubs in negotiations with a view to concluding an employment contract, or represents clubs in negotiations with a view to concluding a transfer agreement”.[6]

For their services, intermediaries receive remuneration, which, on the one hand, is calculated on the basis of the player’s basic gross income for the entire duration of the contract when the intermediary acts on behalf of the player. On the other hand, the remuneration paid to the intermediary by the club should be paid as a lump sum prior to the completion of the transaction or in instalments if agreed. In both cases, the total amount of remuneration per transaction should not exceed three per cent (3%) of the player’s basic gross income for the entire duration of the relevant employment contract.[7] However, the indicative level of commission at 3% is only a “recommendation” and provides a kind of guidance to the market. Ergo, it does not constitute an absolute requirement of a binding nature.

The payment of the intermediary’s commission, when dealing with a foreign intermediary, triggers important tax issues from an international perspective. This is more palpable if we check some numbers related to commissions received by the most influential market participants in 2015: super agent, Jorge Mendes of Gestifute received commissions of US$ 72.72 million; Jonathan Barnett of Stellar Group received US$ 37.62 million; and Mino Raiola US$ 35.63 million.[8]

Indeed, many expensive transfers of football players create controversy. Alleged revelations after a big transfer during the 2016 summer transfer period related to the commissions received by a top agent that brokered this switch, were the main reason that the author of this article started asking why such fees cannot be taxed at source. In that case the famous agent received a significant slice of the player’s transfer fee; namely, £ 41 million. The leaked documents by Football Leaks, in the book The Dirty Business of Football, constituted the springboard for the taking of action by the football’s governing body, which opened an investigation into that deal.

Intermediaries’ fees tax treatment according to the OECD Commentary

At the outset, income earned by an intermediary, deriving from his activity as such, when negotiating a transfer or the conclusion of an employment contract falls under art. 7 OECD MC that deals with business income. The term “business” includes “the performance of professional services and of activities of an independent character”.[9] Accordingly, the intermediation commission is taxable exclusively in the intermediary’s Residence State unless his carries out his activity in the other State through a Permanent Establishment (PE), which is located there.

Furthermore, the OECD 2014 Commentary contains a clear-cut statement, according to which, income received by impresarios on their behalf is outside the scope of art. 17 (taxation of sportspersons at source). A contrario, any income they receive on behalf of the player is covered by it, as it will be subjectively attributable to the latter, even if it will only be actually paid to the agent.[10] In particular, art. 17 excludes income received by a middleman, when acting in that capacity and constitutes the sportsperson’s agent as, a fortiori, he lacks the necessary qualification as sportsperson and secondly there is no sufficiently causal link between the fees and the performance of his client, as the former are received for the services provided in order to conclude the transfer, having the form of “arrangement income”. This applies irrespective of the fact that the agent receives such income as an agency fee directly from the team or as an agency fee directly from the player himself pursuant to their contract, even if he receives it via the team.[11]


Taxation of the intermediaries’ commission at source

It is important to stress that this contribution will draw its attention to the most reputable intermediaries who represent many clients and who will be considered as foreign intermediaries. Such personalities present interest since, in some cases they choose their country of residence with a “hidden intention” to take advantage of its favorable tax regime (e.g. Monaco), which, of course, is not illegal; in fact, one might argue that a failure to select the most favorable set of tax laws is akin to throwing money away!

The author of this article will examine if the intermediaries’ fees may be taxed at source in a two-step analysis:

–  firstly, an analysis will take place to delve into the possibilities of the application of art. 17(2) OECD MC;

–  next in order, an examination of the applicability of art. 7(2) OECD MC, due to the existence of (a) a “Material PE” or (b) potentially of “Agency PE” in the country of the club’s incorporation will take place.


Does a contextual interpretation of art. 17 OECD MC lead to the conclusion that intermediaries’ fees should be taxed at source?

Nowadays, intermediaries have incorporated agencies and they proceed with all the transactions in the name and on behalf of their agency, which receives the taxable remuneration. Below, the author of this article will:

1  examine whether intermediaries may be considered as the “other person” of art. 17; and

2  draw attention to the fact that the scope of art. 17 must become broader.


1  Intermediaries cannot constitute the “other person” of art. 17(2) OECD MC

Agencies could be considered as “other person” under art. 17(2) as they fall within the meaning of a “management company”.[12] For this provision to apply, the particular income must be subjectively attributable to the company and objectively qualify as income from the performances of the player. So, is it possible to say, that the commission is related to the future performance of the player in that country? May we consider it as an inducement payment?

After the conclusion of the deal and subject to the club’s agreement, the player may give his written consent for the club to pay the intermediary on his behalf. The payment made on behalf of the player shall be in accordance with the terms of payment agreed between the player and the intermediary.[13] In this case, it is interesting to see that, in several jurisdictions, intermediaries’ commission is considered as “benefit in kind” for the player. More specifically, in the UK, France, Spain, Portugal, The Netherlands and Italy when the club pays the intermediary on behalf of the player, the fee is considered “fridge benefit” for the player, being taxable as an additional salary for him, as despite being formally appointed by the club, the intermediary acted de facto as the player’s agent during the contract negotiation.[14]

It should be underlined that intermediaries develop an external relationship with the club that pays them the commission, but, according to their internal relation with the player, they are not obliged to pass on their commission to the latter and this could trigger the application of art. 17(2) for them, even if the player’s “benefit in kind” is taxed in his hands. Hence, can the following example be applied by analogy? According to well-established jurisprudence, the signing bonus paid to a sportsperson for joining a team is related to the future “exercise” of the sportsman’s personal activities in the new State.[15]

It can be pinpointed, that intermediaries render possible the realisation of the performance in the new State. In this respect, one could assert that, even if the fees are subjectively attributable to the Agency, objectively, they qualify as income not only for the services provided during the negotiation phase but also for the future performances, as it is due to his future performances that the player signed an employment contract. Looking at the very essence of the intermediaries’ profession, it is found in intrinsic connection with the players’ performance, as they present mutuality; the player to perform needs his agent to assist him in finding a team, whilst the intermediaries’ profession totally depends on their clients’ performance, as it is because of this that they do business.

However, looking at the scope of art. 17, it looks quite difficult to find a causal link between the intermediaries’ fees and the future performance of the player and eventually the parallelism with the signing bonus is inefficient. Both paragraphs of art. 17 have the same substantive scope and apply exclusively to income derived from a sporting performance.


2  The scope of art. 17 OECD MC must become broader

It is difficult to discern why art. 17 is limited in terms of both persons and income covered, since some behind-the-scenes personnel in the sports world (e.g. football coaches, agents) are as well paid as the sportspersons and can similarly take advantage of sophisticated tax structures to minimise residence taxation without establishing a PE in the source State.

Art. 17 should be amended to permit source taxation of foreign intermediaries’ commission, but, of course, not in all cases. This amount should be in excess of a relatively high defined threshold[16] and the proposal of the monetary de minimis threshold for performance income incorporated in paragraph 10.1 of the OECD Commentary on Art. 17[17] may be a good guide in this direction.

Thereafter, if the intermediary earns more than a stipulated amount in the source State, the latter must have the primary jurisdiction to tax the individual on the full amount of income earned therein. In today’s “winner-take-all football market”, a figure of US$ 100,000 (or in case they receive more than the 3% required by the FIFA Regulations) is a suitable threshold that may apply for every transfer in which the respective intermediary takes place.


Intermediaries possess a Permanent Establishment in the  source State

Material PE

According to art. 7 OECD MC:

    1  Profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein.


According to art. 5 OECD MC:

    1  For the purposes of this Convention, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.


As already pointed out, income earned by an intermediary falls under art. 7. Therefore, the intermediary’s residence State has the primary and exclusive right to levy tax on his income.

However, the very same paragraph encloses the PE proviso that refers to profits that are “attributable to” the PE in the  source State in relation with the rules enshrined in art. 7(2) and (3).[18] Intermediaries should be considered to have a PE in the country, where they take part in many transactions and represent a couple of clients playing football. In case a PE is found to be established, then the source State will have the right to impose tax on the received intermediaries’ fees.

Art. 5(1) gives a general definition of the PE, which brings out its essential characteristics in the sense of the Convention, i.e. a distinct “situs[19] and contains the following conditions:

–  the existence of a “place of business”;

–  this place of business must be “fixed”, i.e. it must be established at a distinct place with a certain degree of permanence; and

–  the carrying on of the business of the enterprise through this fixed place of business.


  • “Fixed place of business”

The term “place” is the cornerstone of the PE definition and covers any premises used for carrying on the business of the enterprise, whether or not they are used exclusively for that purpose, whilst it may exist where no premises are available but there is just a certain amount of space at its disposal. It is crucial to mention that it is immaterial whether the premises are owned by the enterprise itself. Moreover, the place of business may be situated in the business facilities of another enterprise.[20]

The “fixed” character of the place of business is indispensable, since, there must be a link between the place of business and a specific geographical point, meaning that it should not have a purely temporary nature.[21] One should bear in mind that a place of business may, however, constitute a PE even though it exists, in practice, only for a very short period of time because the nature of the business is such that it will only be carried on for a short period of time.[22]

Foreign intermediaries usually use the premises of the football club to which one player, that they represent, will be transferred. Furthermore, the fact that an intermediary may need to change locations and not remain in the same premises does not constitute a hurdle for the existence of a PE in the given State, as long as there is a coherent whole commercially and geographically with respect to that business.[23] This is the case for the intermediaries that have several players who play in a country for different teams. In this case, it can be argued that a fixed place of business exists even if the agent is visiting that country and the respective clubs a few times per year to discuss matters related to his clients, since this is justified by the very nature of the profession itself.

To be more cogent, the nature of the intermediaries’ business activities is such that these activities are moved between neighbouring locations and thus a single place of business will generally be considered to exist because a particular location, within which the activities are moved, is identified as constituting a coherent whole. Therefore, the premises of the different clubs, even if they are situated in different locations, constitute a whole commercially and geographically, since they are incorporated in the very same country.


  • Permanent character

The permanent character of the PE is a requirement for its very existence and, in order to be fulfilled, taking into consideration the functional equivalence of the PE concept with other concepts, i.e. residence, a period longer than six months constitutes a landmark at which primary taxation crosses the divide from the State of residence to the source State.

Be that as it may, this is not the case for activities of a recurrent nature. In such cases, each period of time, during which the place is used, needs to be considered in combination with the number of times during which that place is used.[24] Looking at the number of clubs or players, which the foreign intermediary assists in a given State, the more they are, the higher the chances to consider the existence of a PE, with a permanent character, of the foreign intermediary in that State. And this is due to the fact, that this renders it necessary for the intermediary to visit this specific country on a recurring basis rendering every single activity part of one ongoing homogeneous business,[25] which is to move players to that country and assist them to take their career forward.


  • “At the disposal”

The place of business qualifies as a PE only if the taxpayer has the place at his disposal.[26] This requirement follows from the term “through” in art. 5(1) and means that the taxpayer has the power and the right to use this place directly. Yet the type and extent of control need not exceed the level of what is required for the specific type of activity which is determined by the concrete business.[27]

In our case, the intermediary will, in practice, often make use of the premises of the club as he assists the club in the negotiation process and in the conclusion of the respective deal, indication that his presence is tolerated by the club. Thereupon, the very nature of the business of the intermediaries does not require a strict standard of control. This is also strengthened by the fact that a place is at the disposal of an enterprise where the latter performs business activities on a continuous and regular basis during an extended period of time at a location that belongs to another enterprise or that is used by a number of other enterprises,[28] such as other foreign agencies. From the facts that have already been presented, it is indisputable that the premises of the club are at the disposal of the intermediary.


  • Aggregation

In this contribution, we are dealing with foreign intermediaries who represent a couple of players in the same country or several countries, where they take part in all the main deals. Hence, we can say that there are two or more potential PEs that, at the end, should be considered as a unit. In order to be considered as a unit, each element in itself when looked at separately and in isolation must meet the requirements of a place of business. Besides, the requirements of permanence must be analysed on the level of the entirety.[29] In the case of foreign intermediaries, the prerequisites set are met at the different places and, for tax treaty purposes, they must be considered as having a united material PE in the source State(s).


Agency PE

Pursuant to art. 5(5) OECD MC, an “Agency PE” exists when “a person is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise”.

The person must be other than an agent of an independent status to whom art. 5(6) applies and the activities performed should not be of auxiliary character falling under the scope of art. 5(4).


  • Authority to conclude contracts

Primarily, every “person” within the meaning of art. 3(1)(a) qualifies as a dependent agent, whilst there is no need for this person to be an employee of the enterprise and it is not necessary either to be considered resident of the State in which it acts for the enterprise nor have a fixed place of business there.[30]

This person must have the authority to negotiate all elements and details of the contracts that bind the enterprise’s participation in the business activity in the State concerned, but has to make use of this authority repeatedly and not merely in isolated cases. And, of course, the relevant contracts must relate to the operations which constitute the proper business of the enterprise.[31]

It must belong to the typical activities of the agent to communicate with the third party and to discuss and arrange the main features of the contract; it is immaterial if the final signature is made by the agent on behalf of the principal, or by the principal himself. It is sufficient that the principal accepts and acknowledges the results of the actions taken and contracts negotiated by the agent, but is also required that it follows the arrangements of the agent.[32]

To expound the foregoing, the following example: a foreign football agency may have an intermediary in Greece, resident there, who represents the foreign agency vis-à-vis any footballer, who is interest to be represented by the foreign agency and also vis-à-vis any club that is interested to a client of that agency. This person, pursuant to the employment contract with the foreign agency, is responsible for the region of Greece and Cyprus. He recruits players for the agency and proceeds to the negotiation of contracts with teams that are interested to sign Greek players, on the one hand, and, on the other hand, he is responsible for the transfer of foreign players to Greek or Cypriot football clubs.

The lack of active involvement of the agency in the transactions is an indication that the Greek intermediary has been granted the authority to act as an agent proceeding to the conclusion of the respective deals. Of course, the mere participation in the negotiations process in the State between the agent and a client, i.e. a club, is not sufficient.[33] But this is not the case, as the Greek intermediary is the one, who actively negotiates all elements and details of the employment contract with a club in way binding on the foreign agency, even if the contracts are signed by the latter.[34]


  • Habitual exercise

This authority has to be habitually exercised in the other State. The extent and frequency of activity necessary to conclude that the agent is “habitually exercising” contracting authority depends on the commercial realities of the situation and on the nature of the principal’s business.[35]

From the above example, it is crystal clear that the agent is based in Greece and repeatedly exercises his authority as he is in constant contact with the clubs and the players. This is confirmed by the very nature and scope of the business of an intermediary, which has already been demonstrated in detail and is indicative of the excess of the six-months’ threshold.


  • Base Erosion and Profit Shifting (BEPS) Action Plan

It all boils down to facts, and the facts described above warrant the analysis that, in these very specific circumstances, the existence of an “Agency PE” is possible. This is also in line with action 7 of the BEPS Action Plan, “Preventing the Artificial Avoidance of Permanent Establishment Status”, which addresses, inter alia, commissionaire arrangements.[36]

Where a person acts in the other State on behalf of the enterprise, “habitually playing the principle role leading to the conclusion of contracts that are routinely concluded, without material modification by the enterprise” and the contracts are in the name of the latter, art. 5(5) should be considered to apply. In the alternative and in the case this intermediary is doing so in the ordinary course of his business, as an independent agent, he will still not be considered as an independent agent since he acts “exclusively or almost exclusively” on behalf of the foreign agency.[37]



Football intermediaries have started to attract more public attention. As a main rule, their income should be taxed in their residence State. The source taxation, though, should find application in the cases where foreign intermediaries are considered to have a PE in the  source State, whether it is “material” or “agency PE”.

Of course, for a PE to be established, high chances are that we will have to deal with super agencies that represent many players in the same country, even if they are playing for different teams.

This could also be in line with the OECD BEPS Action 7 in relation to preventing the artificial avoidance of PE status.


[1]     LL.M in European and international tax law at the University of Luxembourg.


[2]     KEA, CDES, EOSE, Study on Sports Agents in the European Union, (November 2009), p. 3.


[3]     R. Branco Martins, The FIFA Regulations on Working with Intermediaries. An analysis and opinion from the intermediaries’ perspective”, in M. Colucci, The FIFA Regulations on Working with Intermediaries – Implementation at national level”, 2nd edition (2016), p. 41.


[4]     The FIFA Regulations on Working with Intermediaries replaced the FIFA Players’ Agents Regulations (2008) according to art. 11.


[5]     FIFA Regulations on Working with Intermediaries (“FIFA Regulations”), art. 1.


[6]     FIFA Regulations, p. 4.


[7]     FIFA Regulations, art. 7.


[8] (accessed on 11 August.2017).


[9]     Art. 3(1) (h) OECD MC.


[10]   OECD, Commentary on Art. 17 (2014), para. 7,


[11]   A. Cordewener, “Art. 17”, in: K. Vogel, Double Taxation Conventions, 4th edition (Wolters Kluwer Law & Business, Vienna 2015), Vol. 2, [59].


[12]   OECD, Commentary on Art. 17 (2014), para. 11a.


[13]   FIFA Regulations, art. 7(6).


[14]   K. Offer, C. Moreau, A. Juarez, T.M. Moreira, F. Cabral Matos, P. van Oostaijen and M. Tenore, “The tax treatment of fees paid to intermediaries – The UK, French, Spanish, Portuguese, Dutch, Italian perspective”, in: EPFL Legal Newsletter, Ed. 3 (March 2017).


[15]   Tax Court of Canada, Nikolai Khabibulin v. Her Majesty the Queen, 14 October 1999; US Tax Court, Richard A. Allen v. Commiss’r, 24 June 1968, 50 T. C. 475.


[16]   D. Sandler, “Artistes and Sportsmen (Article 17 OECD MC)”, in: M. Lang, “Source versus Residence’ (Kluwer Law International BV 2008), chapter 13, p. 215-245.


[17]   “Notwithstanding the provisions of Articles 7 and 15, income derived by a resident of a Contracting State […] as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State, except where the gross amount of such income derived by that resident from these activities […] does not exceed an amount equivalent to [15 000 IMF Special Drawing Rights] expressed in the currency of that other State […].”

[18]   E. Reimer, “Art. 7”, in: K. Vogel, Double Taxation Conventions, 4th edition) (Wolters Kluwer Law & Business, Vienna, 2015), Vol. 2, [15].


[19]   OECD, Commentary on Art. 5 (2014), para. 2.


[20]   OECD, Commentary on Art. 5 (2014), para. 4.


[21]   OECD, Commentary on Art. 5 (2014), para. 5-6.


[22]   M. Tenore, “FIFA Regulations from the taxation “corner””, in: M. Colucci. The FIFA Regulations on Working with Intermediaries – Implementation at national level, 2nd edition (2016), p. 113-122.


[23]   OECD, Commentary on Art. 5 (2014), para. 5.1.


[24]   OECD, Commentary on Art. 5 (2014), para. 6.


[25]   E. Reimer, “Art. 5”, in: K. Vogel, Double Taxation Conventions, 4th edition (Wolters Kluwer Law & Business, Vienna: 2015), Vol. 2, [86].


[26]   OECD, Commentary on Art. 5 (2014), para. 4.1.


[27]   OECD, Commentary on Art. 5 (2014), para. 4.5.


[28]   OECD, Interpretation and Application of Article 5 of the OECD Model Tax Convention (2011-2012), p. 9.


[29]   E. Reimer, “Art. 5”, in: K. Vogel, Double Taxation Conventions, 4th edition (Wolters Kluwer Law & Business, Vienna: 2015), Vol. 2, [138].


[30]   OECD, Commentary on Art. 5 (2014), para. 32.


[31]   OECD, Commentary on Art. 5 (2014), para. 32-33.


[32]   E. REIMER, “Art. 5”, in: K. VOGEL, Double Taxation Conventions, Vienna: Wolters Kluwer Law & Business (4th ed.), 2015, Vol. 2, [331].


[33]   OECD, Commentary on Art. 5 (2014), para. 33.


[34]   M. Tenore, “FIFA Regulations from the taxation “corner””, in: M. Colucci, The FIFA Regulations on Working with Intermediaries – Implementation at national level, 2nd edition (2016), p. 113-122.


[35]   OECD, Commentary on Art. 5 (2014), para. 33.1.


[36]   Final Report on Action 7 (2105), [ 9].


[37]   OECD, Base Erosion and Profit Shifting (BEPS) – Public Discussion Draft, BEPS Action 7 Additional Guidance on Attribution of Profits to Permanent Establishments (2017), [5-6].