1. Type of athlete
For proper taxation of image rights, it is important to distinguish between professional and amateur athletes, as well as between individual and collective athletes.
Amateur athlete
Amateur athletes do not receive financial compensation for their sporting activity.
Professional athlete
Professional athletes receive income from their activity and can be classified into two categories:
- Without employment relationship (Individual athlete):
In this case, the athlete acts independently, without any affiliation or regularity in his sporting activity. Normally, he does not receive remuneration, but compensation, since there are no employment contracts. Instead, specific agreements are established, as in the case of MotoGP drivers, tennis players, golfers, boxers or Formula 1 drivers. - With employment relationship (Collective athlete):
This is where an employment contract exists between the athlete and a club. This link involves regular schedules for training and matches. Examples include football, basketball, handball or rugby players.
2. Individual athlete
An individual athlete can differentiate between two types of image: personal and sporting, depending on their nature.
2.1 Personal image
Personal image is completely separate from sporting activity. In this case, the athlete, acting as an individual, assigns their image rights for advertising campaigns, obtaining income that is taxed in two ways:
- As economic activity returns: Yes, in carrying out the advertising campaign, human and material resources are used, such as production teams, technicians, among others.
- As income from movable capital: If such means are not used, that is, if the campaign does not require additional infrastructure or resources for its execution.
In both cases, the income derived from the transfer of personal image rights will be included in the general taxable base and will be subject to the corresponding taxation.
Management through a Company
The athlete can also choose to assign their image rights to a company for management and exploitation. If this option is chosen, taxation will still depend on whether or not human and material resources are used for the campaign. If the management is carried out without resources, the income will be taxed as investment income , while if the hiring of personnel and material resources is required, it will be considered income from economic activity. In this case, both types of income will be included in the general taxable income for Personal Income Tax (IRPF).
2.2 Sports image
A sports image is directly related to the sport an athlete practices and refers to their appearance in activities related to their sport, such as wearing official gear or making mentions of the sport. An athlete may only transfer their sports image to the team or club with which they have a contract, and always within the framework of that contract, as this image is tied to their professional activity. Under no circumstances may they transfer their sports image to entities or sponsors outside of that contract, unlike their personal image, which is more flexible.
As with personal image rights, the taxation of income derived from the transfer of sports image rights will depend on whether the athlete exploits these rights personally or whether a company or third party is in charge of their management.
If a third party exploits the rights, taxation will be determined based on whether or not human and material resources are used. If resources are used for management, the income will be classified as income from economic activity , while if such resources are not required, it will be taxed as income from movable capital.
3. Collective athlete
When it comes to team athletes, there is always an employment relationship that includes a contract between the club and the athlete, who receives a salary.
3.1 Personal image
The personal image of a collective athlete can be exploited individually or through third parties, taxed as income from movable capital or as an economic activity, as appropriate.
3.2 Sports image
Within the sporting image we have to differentiate when it is the athlete himself who exploits that image or when it is a company that has the right to exploit it.
When the athlete exploits his rights
If the club pays for image rights directly to the athlete, this income is considered as employment income and is included in his/her salary. However, this practice is unusual, as elite athletes usually cede their rights to third parties.
When a company exploits rights
When an athlete transfers his image rights to a company, the club must sign two contracts:
- An employment contract with the athlete for his or her sporting activity.
- A contract with the company that manages the image rights.
In Spain, the law allows up to 15% of an athlete's salary to be paid in image rights, while the remaining 85% is considered salary.
- 85% of salary: It is taxed as employment income, subject to the progressive tax rate, which reaches 47% for incomes exceeding 300.000 euros per year.
- The 15% corresponding to image rights: It is taxed as capital gains through attribution of income, with a lower tax rate (19%-27%).
The Treasury does not allow deviations from the 85%-15% scheme. If the percentage allocated to image rights exceeds 15%, the entire amount must be taxed as employment income, at the highest rates (up to 47%). This can be significantly more burdensome compared to the rates applicable to the savings base.
On the other hand, when image rights are below 15%, taxation is more favourable, with rates ranging between 19% and 27%.
Additional income from image rights:
The athlete may also receive direct income from the company that exploits his rights. This is taxed as movable capital or as an economic activity, depending on the availability of human and material resources. It is essential to deduct this amount from the amount declared for attribution of income to avoid double taxation.
Below is an illustration detailing the movements that are made in the previous tax scheme.
4. ZEC companies and image rights
The Canary Islands Special Zone (ZEC) offers an advantageous tax framework that can be attractive to athletes who manage their image rights through companies. The ZEC is a low-tax zone created under the Canary Islands Economic and Fiscal Regime (REF), designed to promote the region's economic development. Companies registered under this regime pay a reduced corporate tax rate of 4% , provided they meet certain requirements.
How image rights fit into the ZEC framework
An athlete can assign the exploitation of their image rights to a ZEC company provided that the company meets the necessary conditions to operate within the regime, such as:
- Be a newly created entity or branch with its registered office and effective management headquarters within the geographic area of the ZEC.
- At least one of the administrators must reside in the Canary Islands.
- Carry out an economic activity that is included among those permitted by the ZEC.
- Hire at least 5 employees in the Canary Islands If the company is located in Gran Canaria or Tenerife, or at least 3 employees If the activity takes place on non-capital islands (La Palma, La Gomera, El Hierro, Lanzarote or Fuerteventura), within 6 months from the time of registration and maintain this average during the years that it is attached to the ZEC.
- Make a minimum initial investment of 100.000 Euros in fixed assets in Gran Canaria or Tenerife, or 50.000 Euros In the case of non-capital islands, this investment must be completed within the first two years from the start of activities.
The use of ZEC companies for image rights management is a highly advantageous tax strategy that combines a reduced rate of 4% on corporate tax with an attractive investment environment, offering sportsmen and women and public figures the opportunity to maximise their profits within a completely legal framework designed to boost the economic development of the Canary Islands.
It is crucial to consider all personal, professional and economic aspects when preparing your tax return to ensure proper compliance with your tax obligations. At FIMAX ASESORES, we facilitate this process and guarantee that you file your return accurately and efficiently.
Contact us through our contact form.
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