Key Takeaways
- U.S. tax exemptions for FIFA prize money apply to national associations, but players, coaches, agents and foreign businesses remain subject to U.S. tax and withholding rules.
- Compensation allocation for matches, training, media and promotional activities affects U.S.-source income, state tax obligations and treaty benefits, making accurate service-day tracking essential.
- Post-tournament tax compliance includes reviewing withholding, claiming foreign tax credits, filing Form 1040-NR and state tax returns and addressing cross-border tax obligations and refund opportunities.
After weeks of competition across the United States, Canada and Mexico, the 2026 FIFA World Cup has delivered memorable performances, controversy and to some hopefuls, disappointing and unexpected results. These surprises may be part of the excitement on the field, but they are far less welcoming to the players, especially when they give rise to significant tax obligations. While the final whistle may have ended the competition, for many players, coaches, agents and foreign businesses, the U.S. tax consequences are only beginning.
Fortunately for the Cup participants, we, at PKF O’Connor Davies, provide real-time guidance to globally mobile employees and professionals as well as international athletes, their agents and clubs. We help these international participants deal with the complexity of the taxing regimes in three countries and multiple cities where the tournament was conducted.
Before the tournament began, FIFA and the U.S. Department of the Treasury reached an agreement under which each qualifying national football association would be treated as an organization comparable to a U.S. tax-exempt organization under section 501(c)(3). As a result, FIFA prize money paid to the participating national associations is generally exempt from U.S. withholding tax. That exemption, however, does not extend to the players, coaches, agents, or many other individuals and businesses involved in the tournament.
Who Are Not Exempt?
So, there are some exemptions, but who are not exempt? 2026 FIFA World Cup players remain subject to U.S. tax on various types of income:
- Compensation attributable to matches
- Training sessions
- Promotional appearance
- Media activity
- Brand representation and image rights
- Other services performed in the United States
Other foreign businesses and individuals involved in the tournament may also face U.S. tax obligations. This includes coaches, referees, team personnel, agents, temporary workers and contractors providing security, transportation, broadcasting, or event-management services. Media organizations and sponsors may also be affected.
Performing services or conducting activities in the United States create tax obligations not only for the individual participants, but for the foreign businesses. Potential tax consequences include:
- The taxation of U.S. trades or businesses;
- Permanent establishment exposure under an applicable income tax treaty;
- Federal and State income tax and filing obligations;
- Payroll, withholding and employment tax obligations; and
- State sales tax, business nexus, or registration requirements.
One crucial aspect of U.S. taxation is sourcing of income and in terms of the FIFA World Cup soccer teams, the tax clock starts ticking not when a player steps foot on a field but as soon as taxable services are performed in the U.S. Some international players could be nationals and tax residents of U.S., Mexico and Canada and that makes analysis between the jurisdictions even more complicated.
A Common Trap. Allocating Compensation.
While many international athletes understand that compensation for matches played in the World Cup are generally subject to tax, they often overlook that a player’s salary or tournament bonus may need to be allocated between U.S., Canada, Mexico and the various States in which the games were played. The allocation depends on the facts and circumstances, including where training, promotional appearances, media obligations and other required services are performed. The allocation is very consequential because each of the host countries have their own system of tax and tax rates, as well as U.S. states, whose tax rates vary between very high in California to not taxable in Texas and Florida.
Illustration: A player receives a $600,000 tournament bonus. During the tournament, the player performs 30 service days, of which 12 are spent in the United States (matches, mandatory training, media events and sponsor appearances). Assuming a reasonable service-day allocation, approximately 40% ($240,000) of the compensation may be treated as U.S.-source income and potentially subject to U.S. taxation and withholding. The remaining $360,000 may be sourced outside the United States, depending on the facts and applicable treaty provisions. And the U.S.-source compensation must be further sourced to the State in which their services were rendered.
Thus, determining the proper compensation allocation requires careful documentation of service days and a detailed review of the player’s contractual obligations.
Next Steps
Now that the tournament has closed and a new world champion crowned, the nature of the tax challenges shifts from the planning stage to reviewing what was done so far and how final tax assessment is determined and tax returns that need to be filed. In some cases, U.S. withholding taxes may have been retained and remitted to the taxing authorities while others may have been missed and tax is still owed. These U.S. tax obligations must be determined on a person-by-person and payment-by-payment basis.
Services we can provide include:
- Determining whether withholding was correct
- Claiming treaty benefits
- Obtaining foreign tax credits
- Filing Forms 1040-NR
- State income tax returns
- Refund opportunities when too much tax was withheld
We Can Help
Although the World Cup has ended, the tax obligations often continue long after the trophy has been lifted. Early post-tournament review can identify filing obligations, refund opportunities, treaty benefits and potential compliance gaps before they become costly.
PKF O’Connor Davies can analyze the relevant facts so that FIFA players, agents and other participants understand the full exposure across all U.S. tax jurisdictions and help remedy the gaps in compliance. We can help with necessary U.S. tax filings. Our global mobility tax team are experts in cross border taxation of individuals including necessary filings, tax treaty benefits and resolving delinquent filing obligations. Our team, along with our PKF Global tax colleagues around the world, can assist in over 150 countries and 400 locations. Wherever you are, we are.
Contact Us
Evgenia Belyavskaya
Tax Partner
PKF O’Connor Davies
ebelyavski@pkfod.com | +1 646 206 2013
Leo Parmegiani, CPA, MST
Tax Partner
PKF O’Connor Davies
lparmegiani@pkfod.com | +1 646 699 2848
This alert is intended to flag emerging developments and does not constitute tax or legal advice. The legislative position described above remains subject to change.