By Mayur Nayak, Tarunkumar G. Singhal, Anil D. Doshi, Chartered Accountants
fiogf49gjkf0d
In a Circular (No. 2012/03814HR) of 9th October 2012, the State Secretary for Finance announced that the decision of the Court of Appeals-Hertogenbosch that a sportsman is entitled to avoidance of double taxation for foreign employment income attributable to a test match will not be appealed before the Supreme Court.
The State Secretary held decisive that the test matches (held in Spain and Thailand) were open for the public, which means that the sportsman’s performance was aimed at an audience. In addition, he took the view that the Dutch Supreme Court would confirm its earlier decision of 7th February 2007, in which it was decided that if the employment contract obliges a sportsman to participate in games and races in foreign countries, the basic salary, generally, has to be allocated to his income from personal activities in the state of performance on a pro-rata basis, unless the employment contract indicates otherwise. In that case, the Supreme Court indicated that the term “personal activities” covers the performance aimed at an audience and time spent for activities related to such performance as training, availability services, travel and a necessary stay in the country of performance.
Furthermore, avoidance of double taxation was in that case also granted for training activities, sponsoring activities and contacts with the press.
