This column was previously published on SportKnowhowXL.nl.

Introduction
At 19, I signed my first contract as a professional speed skater with the commercial team DSB. After my time in the youth team selection, this marked the transition to life as a true professional elite athlete. And part of that life involved my first, somewhat more serious, income tax returns.

Through a teammate, I found a tax advisor who specialized in working with athletes. In those early years, I had to keep track of all my foreign days: for each training camp or competition abroad, I would note where I was, how many days, and whether I earned extra income there. These details were processed in my tax returns. I didn’t know exactly how it worked, but it ultimately yielded tax benefits. Over time, the rules changed and the advantage remained only for a handful of countries – where, coincidentally or not, there wasn’t a single ice rink. For later years, I no longer had to track the days so precisely – and certainly not for every country.

I am no longer a professional athlete myself but now work as a tax specialist — including for top athletes. The topic of “foreign days” still comes up regularly. By now, I do understand how it works: it concerns the so-called deduction to prevent double taxation.

In this column, I explain how it works when a Dutch athlete living in the Netherlands earns income abroad — and how that is treated for tax purposes.

(A small caveat: for readability, some parts are simplified. In reality, rules vary by country and can be much more complex.)

Performing Abroad, Taxed Abroad?
Elite athletes are rarely active solely within the Netherlands. Especially at a high level, there is considerable travel and income can be substantial. Through competitions and training camps, athletes travel worldwide. In addition to their Dutch income — for example, from sponsors, clubs, or teams — they often receive foreign income such as start and performance bonuses, prize money, or other rewards directly linked to their performances abroad. But how are these foreign incomes taxed? And — equally important — which country has the right to tax those earnings?

Tax Resident of the Netherlands: Tax on Worldwide Income
An athlete who is a tax resident of the Netherlands is subject to tax in the Netherlands on his or her worldwide income. This means that all income, earned both in the Netherlands and abroad, is taxed in the Netherlands. Whether someone is classified as a tax resident depends on facts and circumstances. As long as a Dutch athlete maintains a lasting personal connection with the Netherlands — and unless a tax treaty states otherwise — he or she is taxable in the Netherlands on total worldwide income. If the athlete moves abroad, they cease to be a tax resident of the Netherlands and the Netherlands can no longer tax their worldwide income. However, the Netherlands may still tax income earned within the country.

Tax on Foreign Income and Avoiding Double Taxation
Athletes earn income globally. Generally, the host country — where the athlete is physically active — has the right to levy tax on the benefits paid to the athlete. This can, however, lead to double taxation: the host country taxes the income earned during activities there, while the home country — the Netherlands — wants to tax the athlete’s entire worldwide income.

To avoid double taxation, countries enter into tax treaties. Almost all treaties the Netherlands concludes contain a so-called ‘sportsmen and entertainers clause.’ This clause grants the country where the physical sporting activity takes place the right to tax the income derived from those activities.

Avoiding Double Taxation: Credit or Exemption Method
When a Dutch athlete receives income over which another country has taxing rights under a tax treaty, the Netherlands must grant relief by either the credit (verrekeningsmethode) or exemption (vrijstellingsmethode) method, as laid down in the treaties.

Credit Method
The vast majority of Dutch tax treaties apply the credit method for athletes (and entertainers). Here, the foreign withholding tax can be credited against the Dutch income tax due. The Dutch tax authorities usually require proof of the actual foreign tax withheld. The credit is limited to the portion of Dutch tax attributable to the foreign income to prevent double exemption.
Some countries apply a threshold below which no withholding tax is levied. If no foreign tax is withheld, nothing can be credited and the foreign income is generally fully taxed in the Netherlands.

Exemption Method
The exemption method is still present in some older treaties: Israel, Luxembourg, Morocco, Singapore, Spain, and Thailand. Under this method, the foreign income is exempted in the Netherlands, based on a proportional allocation of income to the other country.

A key difference with the credit method is that actual foreign tax payment is not checked. This can lead to a tax advantage, for instance if the other country does not tax the income or taxes it at a lower rate than the Dutch exemption would permit to exclude.

From Prize Money to Basic Salary: How Are Sports Income Allocated?
But how exactly is income allocated to each country? Sometimes the answer is clear: prize money awarded for a specific event abroad is logically allocated fully to that country. But there are cases where allocation is less straightforward.

Take a footballer who received a bonus for advancing in a European tournament, with one match in the Netherlands (lost) and one in Spain (won). The question was: to which country should the bonus be attributed? The court ruled that the bonus should be split equally between the Netherlands and Spain — a direct allocation based on performances rather than the time-proportional division the player had proposed.

A similar principle applies to the normal salary. Suppose the same player is under contract for a year with a Dutch club but plays matches and attends training camps in Spain. A portion of his salary may be allocated to Spain based on a count of workdays: how many days did he work for the club, and how many of those days were in Spain? Based on this, that part of the income may be exempt from Dutch tax because Spain has the primary taxing right — potentially yielding a tax benefit.

These examples illustrate some practical challenges in international sports income, where not only workdays but also travel days, rest days, and inactive days can affect tax treatment. Additionally, the nature of the income and the manner in which the athlete receives it — as a private individual, sole proprietor (IB-ondernemer), or through a private limited company (BV) — plays a role in determining double taxation and the possible advantages or disadvantages for the eventual tax due.

In Summary
Keeping track of foreign days remains useful and can provide benefits. However, since many tax treaties have replaced the exemption method with the credit method, achieving a tax advantage is now less frequent. Tax rules differ by country, situation, and type of income, making this a complex subject. For elite athletes with foreign income, there is one key recommendation: seek professional advice!