Skip navigation
Cristiano Ronaldo Copyright Jan Kruger, Getty Images

Taxes Through the Lens of Cristiano Ronaldo

Tracing the star’s career path to demonstrate how European new resident tax regimes may be appealing to mobile athletes.

By Jacopo Crivellaro and Andrea Mirabella

Tax treatment is often an important consideration for soccer players and professional athletes who relocate to new jurisdictions.

Cristiano Ronaldo dos Santos Aveiro or CR7, has acquired legendary status in soccer’s Hall of Fame, having won 26 trophies in his career, including five league titles in Spain and the United Kingdom, five UEFA Champions League titles and a UEFA European Championship with his national team, Portugal. His soccer career began at Sporting CP in Portugal, he then moved to Manchester United in the U.K. for six seasons, Real Madrid in Spain for nine seasons, and he has recently joined Juventus F.C., one of Italy’s leading soccer clubs and winner of the past seven Italian soccer leagues.

Conveniently, Portugal, Spain, the United Kingdom and Italy offer some of the more interesting tax regimes for incoming soccer players or professional athletes.

This article analyzes in summary fashion the special tax regimes for incoming residents in Europe, tracking a hypothetical journey along the Portuguese champion's career, with a special focus on the most recently introduced regime: Italy’s. 


On September 2009, the Portuguese Government introduced a new tax regime for “non-habitual tax resident individuals,” which exempts for 10 years eligible applicants from the ordinary Portuguese tax rules of worldwide income and wealth taxation, and further provides for beneficial tax treatment of certain forms of income. More specifically, Portuguese-source employment and self-employment income that is derived from high value-added activities of a scientific, artistic or technical nature (as outlined in a list of activities published by the Portuguese Government) is taxed at a flat rate of 20 percent. If the services rendered are not encompassed within this list, Portuguese-source income from these activities will be taxed at regular progressive rates of up to 48 percent (special surcharges may apply). Certain other types of non-Portuguese source income (such as pensions, dividends and interest) may also be exempt from taxation in Portugal if these are taxable in the source state.

Until 2007, Portuguese tax-resident athletes, sports players and referees who were employed under a services contract with a Portuguese employer could benefit from a special income tax regime, whereby they could opt for either taxation of their net income at progressive tax rates (while benefiting from an unlimited deduction for insurance contributions) or they could opt for a reduced flat rate tax on their gross income. However, this special tax regime is no longer available to Portuguese tax-resident athletes, sportspersons or referees, regardless of the national or international nature of the underlying services performed.


Spain offers favorable tax breaks for incoming taxpayers who transfer their tax residence to the country. In fact, under the so-called Beckham Law (named for David Beckham, who relocated to Madrid in the mid-2000s), incoming employees who were not previously Spanish tax residents for the prior 10 years and who relocate to Spain pursuant to an employment contract with a Spanish-based employer can benefit from favorable tax treatment for their first 6 years of residence. More specifically, they are allowed to opt not to be taxed in Spain on non-salary income which is sourced outside of Spain, such as dividend, interest or capital gains obtained abroad and therefore be subject only to taxation on Spanish-sourced savings income and capital gains at a tax rate of 23 percent if in excess of €50,000, while employment income is taxed at 24 percent up to €600,000 and 45 percent for the amounts in excess.

However, professional athletes, including soccer players, have been expressly excluded from this regime starting from 2015. This restriction applies on a prospective basis, so that prior employment contracts were grandfathered. 


The United Kingdom also offers a favorable tax regime for incoming residents who aren’t domiciled in the U.K., known as the resident non-domiciled (UK RND) regime. Under the UK RND regime, taxpayers who claim the “remittance basis” of taxation are only subject to U.K. tax on non-U.K. income and non-U.K. capital gains when these are remitted to the U.K. Foreign income and gains that are not remitted to the U.K. are not subject to taxation in the U.K. on an arising basis. Remittances are broadly defined to include foreign income and gains that are brought to, received or used in or used to pay for a service provided in the U.K., by the taxpayer or for his benefit. Remittances of foreign “clean-capital” (i.e., previously earned income, as well as inheritances or gifts) are not taxable in the U.K.

The UK RND regime is only available for the first 15 U.K. tax years in which a taxpayer is tax resident in the U.K.; provided the taxpayer doesn’t acquire a U.K. domicile. Importantly, a tax year in the U.K. runs from April 6 to April 5 of the following year. After a taxpayer has been a tax resident in the U.K. for at least 15 out of the previous 20 U.K. tax years, they will become deemed domiciled in the U.K. for all tax purposes from their 16th tax year of residence in the U.K., meaning taxation of foreign income and gains on an arising basis and not simply when these foreign income and gains are remitted to the U.K., as well as exposure to U.K. inheritance tax at 40 percent on worldwide assets above a threshold of GBP 325,000 (subject to certain exemptions for spousal or charitable dispositions). In a taxpayer’s initial 15 years of tax residence under the UK RND regime, one would be subject to U.K. inheritance tax only on U.K. situs assets, including lifetime transfers of U.K. situs assets, unless these are within an exception.

A “remittance basis charge” applies in the amount of GBP 30,000 once the taxpayer has been a U.K. tax resident for at least 7 of the previous 9 tax years, increasing to GBP 60,000 if the taxpayer has been a U.K. tax resident for at least 12 of the previous 14 tax years.


The 2017 Italian Budget Law introduced a significant tax incentive regime for high-net-worth individuals who wish to relocate to Italy. According to the new regulations, certain “new-resident” taxpayers who relocate to Italy may opt for a yearly €100,000 flat tax on their foreign-source income in lieu of Italian ordinary taxation on an arising basis on foreign-source income and gains.

This favorable tax regime can apply to both Italian citizens and foreigners who have not been Italian tax residents under the domestic rules for at least 9 of their previous 10 years. Eligible new residents can choose to pay the €100,000 flat tax in lieu of Italian income and wealth taxation on foreign-sourced income and foreign situs assets. This exclusion includes both foreign-earned income, like salaries and wages, director’s fees and foreign passive income such as dividends, interest, as well as the income and assets held through offshore trusts, foundations and similar holding structures. There is an exception in the case of capital gains realized upon the disposition of significant foreign shareholdings, that is, shareholdings that entitle more than 20 percent of the voting rights or representing more than 25 percent of the share capital of a company, reduced to 2 percent and 5 percent for listed companies in the first 5 years of residence in Italy, which are otherwise subject to ordinary taxation in Italy. Italian-sourced income is excluded from the flat tax, and is taxable under the ordinary tax regime, with the highest marginal tax rate of 43 percent (not including additional regional and municipal income taxes).

The Italian Controlled Foreign Corporation rules that generally adopt a look-through approach for the attribution of foreign income don’t apply to taxpayers who elect to relocate under the new regime. There is also no “remittance basis” of taxation, so that remittances of foreign source income to Italy don’t trigger taxation. New residents are also exempt from foreign asset reporting requirements, except as it applies to foreign qualified shareholdings held during the first 5 years after the relocation to Italy, as well as the Italian wealth tax on foreign real estate and foreign financial assets.

In general, no foreign tax credit can be claimed in Italy to offset the €100,000 substitute tax.  However, a new resident can elect to exclude from the flat tax regime income sourced from selected countries (adopting a “cherry picking” approach). In this case, income from those jurisdictions becomes fully taxable in Italy, allowing the taxpayer to benefit from a foreign tax credit in Italy to the extent there has been dual taxation of the same income. According to guidance issued by the Italian Revenue Agency, a taxpayer who relocates to Italy pursuant to the flat tax regime should be treated as a “resident” of Italy for tax treaty purposes, however, eligibility for treaty reduced withholding may also depend upon the source country’s tax rules.

Gratuitous transfers of assets and rights located outside of Italy are exempt from Italian gift and inheritance tax. In other words, according to the new regime, non-Italian situs assets can be gifted by a new resident without triggering Italian gift taxation. Conversely, gifts or bequests of Italian situs property would be subject to Italian gift or inheritance taxes (the highest rate for transfers to unrelated third parties is 8 percent with no minimum exemption amount).

The regime is valid for a maximum period of 15 calendar years and is revocable, without triggering payment of penalties, at any time. Once revoked, participation in the regime cannot be reinstated. An advance tax ruling may be filed with the Italian Revenue Agency to ascertain, on a preliminary basis, eligibility for the regime. Upon acceptance, the Italian Revenue Agency will inform the tax authority of the country of the taxpayer’s last residence of the relocation. In this regard, a soccer player can take full advantage of the regime as long as he plays for an Italian soccer club, revoking the treatment upon his transfer to a foreign club.

It’s also possible to extend the tax regime to an applicant’s family members, upon payment of an additional €25,000 for each family member (this can also be done in subsequent tax years without compromising the taxpayer’s original election for the regime).

Generally, a professional soccer player who has entered into a sports performance contract with an Italian soccer club is treated as an employee of that soccer club and, consequently, earnings from his services qualify as subordinate employment income. This income is taxed in Italy if the services are performed in Italy. Therefore, this is generally treated as Italian-sourced income, taxed under ordinary Italian tax rates and excluded from the €100,000 flat tax. On the other hand, amounts paid by the soccer club as a discretionary bonus for services performed wholly and exclusively outside of Italy,such as a prize for winning an international soccer competition that was held outside of Italy or compensation for taking part in a soccer tour in the United States, could be treated as non-Italian source income that is within the scope of the €100,000 flat tax payment, and that would not be subject to tax in Italy.

Furthermore, an important ancillary stream of income for professional athletes is income derived from the commercial exploitation of one’s image rights, like revenue from sponsorship contracts. When the treatment of an athlete’s image rights is agreed to as part of the employment contract, the employment relationship will encompass such payments with the result that such payments should be treated as Italian-sourced subordinate employment income. If an athlete’s image rights aren’t addressed as part of the employment contract, the income that is attributable to the exploitation of the image rights may be categorized as “other income” (a residual catch-all category, which includes income from different sources that cannot otherwise be included in the more specific enumerated categories of income) under domestic Italian tax rules. Such income is treated as foreign (not sourced in Italy) if it refers to assets located abroad or to activities performed outside of Italy. As an example, payments received by a soccer player from an American sportswear company for sponsorship activities carried out exclusively in China (and that aren’t related to the soccer player’s performance vis-à-vis the soccer team), could be treated as non-Italian source income. Alternatively, if the athlete's image rights have been assigned to a non-Italian image rights company, the dividend paid from that company, such as the image rights company that manages the athlete’s image rights, could be treated as non-Italian source income if paid by the foreign entity, absent a finding of abuse. In general, the CFC rules should not apply to taxpayers who establish non-Italian holding companies, such as image right companies, for the commercial exploitation of their image rights. Similarly, income from a trademark registered by an athlete, such as Ronaldo’s CR7, should be encompassed within the category of “other income.”

As of today, the Italian Revenue Agency has not yet provided official guidance regarding the treatment of “off-the-field income.” Therefore, in the above illustrated scenarios, it would be advisable to consider submitting a tax ruling to the Italian Revenue Agency to confirm the Italian or foreign source nature of these income streams for “off-the-field” services that are performed outside of Italy. In this case, the ruling that would be requested from the Italian Revenue Agency differs from, and should not be confused with, the ruling that is otherwise filed to ascertain a taxpayer’s eligibility for the new regime.


Jacopo Crivellaro and Andrea Mirabella are associates with Baker McKenzie in the Geneva and Milan offices, respectively.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.