Tax Strategy Behind Global Sports Competition Contracts

RUST, DDTCNews – Extraordinary euphoria has swept across Austria following the national team's success in ending a long 28-year wait to return to the World Cup stage since their last appearance in 1998.

Amidst the cheers of the public crowding around large screens on street corners, the fanfare of major sporting tournaments in reality tests not only nerves on the pitch, but also the fiscal sovereignty of the host nation in the conference room.

This historic momentum has indirectly provided the backdrop for tax academics gathering at Rust Conference 2026, where the close relationship between the dynamism of international sports competitions and a country's legal compliance is examined more closely.

The discussion at this session on tax rules in non-tax agreements highlighted how major sporting events compel countries to renegotiate the boundary between domestic tax policy and international commitments.

The issue is no longer merely the granting of incentives, but rather the extent to which tax treatment in host agreements can bind the applicable domestic tax law.

Effects on VAT and GST

Take Poland as an example. The hosting of UEFA EURO 2012 revealed a clear asymmetry between direct taxes and indirect taxes.

In terms of direct taxes, Poland was able to grant exemptions through domestic provisions and host guarantees, but in terms of VAT, the room for compromise was far narrower due to the constraints of European Union (EU) harmonisation.

Consequently, the promise of tax neutrality in a host agreement cannot always be fully realised. Poland affirmed that tax exemptions for sporting events could be applied to personal income tax (PIT) and corporate income tax (CIT), but that establishing VAT exclusions deviating from the EU framework was not straightforward.

In a similar vein to Poland, Canada framed the same issue in terms of GST. In its country report, Canada confirmed that turnover taxes operate on the destination principle. Consequently, digital transactions, services and certain sports-related services may be treated according to the location of consumption rather than the location of the service provider.

In terms of sporting events, Canada provided a concrete example through the FIFA World Cup 2026. The federal government issued a remission order exempting GST, import duty and excise tax on certain goods imported for the organisation of the tournament, thus, tax relief was granted through an administrative instrument rather than through changes to the structure of the tax law.

Canada's presentation also positioned non-tax agreements as an important basis, but not the primary source of tax norms. The Chicago Convention, the Melbourne Agreement and NATO SOFA can all influence certain tax treatments. However, GST continues to be treated as a consumption tax that does not, as a matter of principle, automatically fall outside the domestic tax regime.

In the sporting context, the emerging model is one of limited and targeted exclusions. Canada demonstrated that tax concessions for major events are typically implemented through remission orders under the Customs Tariff Act. This allows the government to maintain flexibility without allowing permanent changes to its tax system.

Photo caption: Presentation by one of the participants at Rust Conference 2026 on the topic of Tax Rules in Non-tax Agreements, Saturday (04/07/2026).

Meanwhile, the delegation from China, in its presentation, highlighted a more conceptual question: whether the tax treatment in the Olympic Host City Contract establishes new tax norms or merely shifts the burden of implementation to domestic law. The focus was on the relationship between event contracts, national law and the limits of the legitimacy of contractual tax-making.

The key point from this session is that contractual freedom cannot wholly replace tax law. When a non-tax agreement promises tax neutrality, the state must continue to demonstrate that this remains compatible with the constitution and the limits of administrative authority in each country.

Practical Implications

The common thread is that major sporting events almost always give rise to requests for special tax treatment. However, the design of that treatment depends greatly on the type of tax. In this regard, direct taxes are relatively easier to relax, whereas turnover taxes, such as VAT and GST, are far more difficult to exclude on a unilateral basis.

Ultimately, the discussion revealed that this issue is not merely a matter of facilities for event organisers, but rather one of the limits of coordination between legal regimes.

Insofar as there is no genuinely uniform international framework, each country will use a combination of host agreements, refunds, rebates and remissions to accommodate its fiscal interests and commitments to hosting international events. (rig)

*This article is reported by Senior Specialist of DDTC Consulting, Dawud A. Q Lubis, and Specialist of DDTC Fiscal Research & Advisory, Abiyoga S. Wiyanto.