Special-purpose enterprise

Organizational services provided by the body governing a sport or sports (such as organizing league games) constitute a special-purpose enterprise if amateur athletes make up the majority – over 50% – of participants in the sporting event. A league’s “licensed athletes” do not count as amateurs for tax purposes. In soccer, for example, a licensed player is one who

•  plays the sport based on a written contract entered into with a licensed club or a corporation and
•  is permitted to play thanks to a written license agreement that has been entered into with the league association.

The term “licensed athlete” is thus used for a particular status, regardless of payments that may have been agreed or received.

Note: There is no preferential tax treatment for organizational services that predominantly benefit licensed athletes. Organizational services for sales of foods and beverages and for advertising do not receive preferential tax treatment, either.

In the case of sports organized within leagues, all sporting events for a particular league (such as all matches in a given season) constitute a single sporting event. Organizational services provided by the body governing a particular sport can thus be allocated by leagues to either the special-purpose enterprise or the taxable commercial business. This is because the governing body is aware of how many of the eligible players are amateurs and how many are licensed players.

Note: We are happy to advise you on the tax treatment of individual league games as a sporting event at the level of the sports club involved.