A review of the impact of permanent establishment status on F1 Grand Prix around the world.
When sporting bodies hold events in other countries the companies hosting the events are often not considered to have created a permanent establishment in that country.
Generally speaking once a company creates a PE in a country, the company’s profits are subject to tax in that country.
In 2017, the F1 wanted to host a Grand Prix in India, however, under Indian Tax rules this would have created a permanent establishment India. Meaning that their company profits would be subject to tax there.
F1 felt that this was an incorrect interpretation of the rules and so took the case to the Indian Supreme Court.
F1 made many arguments to the courts, perhaps the most significant was their claim that the hosting of a 3 day event is not sufficient to create a fixed place of business.
The Supreme Court noted that race event may only be 3 days but the drivers teams arrive a few weeks before to set up and stay on a few days after the event to close down.
Hosting an international sporting event is complex as in many countries there are tax withholding requirements for the athletes/drivers.
It creates added complexity if the mere hosting of the event is sufficient to create a permanent establishment in that country.
Case Ref: Formula 1 (2017) 19 ITLR 784Return to Knowledge Hub
The Belgian tax authorities as new referee in footballTax Opportunities for Players Transferring to Italy and EnglandCourt of Justice of the European Union finds that a footballers claim for expenses was falseISTA Interviews: Ciarán Medlar, Partner at BDO IrelandISTA response to claims of huge scale tax avoidance in English Football