Taxation of player training rights in sports entities

The Directorate General of Taxes (DGT) has issued a relevant ruling for non-profit sports entities that are not covered by the regime of Law 49/2002. The issue focuses on determining whether income received as player training rights must be taxed under Corporate Income Tax (Impuesto sobre Sociedades) or if it can be considered exempt income.

What the DGT has resolved

The administration has established that income derived from player training rights does not qualify as exempt income. The criterion is based on the fact that this income derives from an economic activity per se. Since they are not included in the scope of application of Law 49/2002, these entities are considered partially exempt, which implies that only their income linked to their social purpose and not derived from economic activities enjoys exemption.

In this sense, the DGT points out that:

• Income from training rights constitutes an economic activity subject to tax.
• It must be declared in Form 200 (modelo 200) as non-exempt income.
• Even donations or fees specifically intended to finance said economic activity will be subject to Corporate Income Tax.

What it means for you

For sports associations and entities, this pronouncement delimits the boundary between exempt income and taxable income. If your entity receives income from the training and subsequent transfer or rights of players, you must include these amounts in your Corporate Income Tax taxable base. It is fundamental to understand that the nature of the entity (non-profit) does not guarantee exemption if the source of the income is a recurring or professionalized economic activity.

What should be done

It is necessary to perform an analysis of the origin of each income stream to correctly distinguish between income linked to the exempt social purpose and that which derives from economic activities. It should be verified whether the entity meets the requirements of Law 49/2002 to ensure the correct tax treatment. Each situation must be assessed individually to determine the impact on Form 200 and to avoid contingencies before the Tax Administration.