While football world governing body Fifa has had to increase its World Cup 2026 prize fund and participation fees after Participating Member Associations (PMAs) voiced concerns that they would lose money by taking part, this has caused further concern for the tax positions in which participating countries now find themselves.
In April Fifa raised the total prize fund and participation fees to a record US$871m, up from an original US$727m, including US$53.5m to the winners (up from US$50m). All PMAs are guaranteed at least US$12.5m (up from US$9m) for their participation – a minimum of US$10m for participating and a further US$2.5m to cover preparation costs.
Associations are liable to pay multimillion-dollar bills to the US tax authorities
In fact, the tournament is record-breaking on a number of points. It is the first time it has been played across three countries (the US, Canada and Mexico), and the number of teams taking part has increased from 32 in Qatar in 2022 to 48 this year. A record 104 matches will be played in 16 cities.
It is this growth in scale that has enabled Fifa to revise the prize pot after projecting record revenues of US$9bn from the tournament compared with US$4.5bn four years ago in Qatar.
Unlevel playing field
However, the chief financial concern for participating teams centres is now around tax exemptions – with the improved prize funds considered as compensation to mitigate against Fifa not securing them.
Canada and Mexico have granted tax exemptions to all PMAs who play in their countries. That is not the case in the US.
Fifa has historically demanded tax exemptions for itself and related parties from countries hosting World Cup tournaments. But despite considerable lobbying and last-minute negotiations with the US treasury and President Trump’s World Cup taskforce, Fifa – which has enjoyed exemption in the US since 1994 – did not secure tax concessions for the participants, leaving the PMAs liable to pay multimillion-dollar bills to US tax authorities on top of tax payable in their home countries.
Sliver of hope?
Fifa did offer to provide ‘support to teams that desire to seek an exemption from US federal and state income tax’. A memo called on federations interested in receiving Fifa’s ‘paid tax support’ to opt in by April. It is not clear how many took up the offer.
According to Oriana Morrison, a tax accountant who advises the Scottish and Portuguese football federations, some federations may be eligible to apply for Recognition of Tax-Exempt Status under §501(c)(6) of the US tax code.
‘Section 501(c)(6) regulations have existed since 1913 – and in their current state since 1954. This is neither new nor exclusive to Fifa,’ Morrison says. ‘What Fifa is doing is pushing the federations to apply for this status so that Fifa itself becomes exempt from withholding US tax from prize money paid to the national teams for US matches.
‘Federations will still need to apply for 501(c)(6) recognition; it is neither automatic nor guaranteed.’
Players taxed, too
The US expects PMAs to pay federal tax of 21%. There are also significant differences in levels of state and city taxation across the US, which could result in some federations paying more tax than others, depending on where their games are played.
Furthermore, a PMA’s tax exemption makes no difference to the players. Non-resident alien athletes providing independent personal services in the US are taxable regardless of any treaty or the payer’s tax-exempt status. So, although a federation may be tax-exempt if it obtains 501(c)(6) recognition, its players are not.
Without proper tax treaties or credits addressing the specific circumstances of players and coaching staff, they face tax bills both in the host country and in their country of residence.
‘In US politics there is huge resistance to giving tax breaks to sporting organisations’
Almost half – 21 participating countries, including Brazil, Argentina and Saudi Arabia – don’t have double-treaty agreements with the US. Brazilian and Argentinian players will be among the most affected, with both nations playing all three of their group games in the country.
Players from non-treaty nations could be subject to a 37% federal withholding tax on US income with no available reductions, plus city and state taxes. In California, for example, that means an additional 13.3% in state tax on income generated at venues in the state.
‘In US politics, there is huge resistance to giving tax breaks to sporting organisations,’ says Morrison. ‘The NFL used to be a tax-exempt organisation, but they were making such vast amounts of money that there was enormous backlash and it was removed.
‘For Fifa, it’s fine; the ticketing, hospitality and sponsorship income, which runs into billions, will be tax exempt. But for the federations, no. For the players and coaching staff, no. For the delegations, hopefully yes, provided they are coming from a country that has a tax treaty.
‘Fifa and the US tax authorities will be the biggest winners from the World Cup.’
