Do you ever really pay 0% income tax?

A review of footballers tax position when they move to the Gulf States.

Following Ronaldo’s move to Saudi Arabia there have been many headlines on the tax treatment of his new salary. Saudi Arabia – like many Gulf States do not impose an income tax. Usually for footballers they will pay income tax in the country that they are playing in. However, players who move to low or 0% income tax countries may still have tax liabilities in other countries.

Mirko Vučinić played in Italy for Roma and Juventus joined UAE Arabian Gulf League side Al Jazira.

The UAE doesn’t have an income tax, however, Italy still sought to tax the income Mirko earned from 2014 to 2017. The basis for taxation was under the Double Tax Treaty between Italy and the UAE.

Under the Treaty an individual can only be treated resident in one country. The Italian courts found that Mirko’s center of vital interests remained in Italy and therefore his income between 2014 and 2017 was taxable in Italy even though he was living in Abu Dhabi at the time. Amongst other things, the courts looked at where his wife and children lived, where they went to school, and the numerous properties and cars that Mirko had in Italy.

Full case available to read here: https://www.giurisprudenzapenale.com/wp-content/uploads/2020/11/Cass-29095-20.pdf

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